Mortgage Broker Admits $100 Million Scam

     SAN DIEGO (CN) – An unlicensed mortgage broker pleaded guilty Thursday to running a $100 million nationwide loan origination fraud and kickback scheme, and skimming $14.5 million from it.
     Mary Armstrong, 51, ran the scam out of San Diego, the U.S. Attorney’s Office said.
     Armstrong has been in jail in Las Vegas since she was arrested and indicted in May 2012.
     As part of today’s guilty plea, Armstrong admitted that she defrauded mortgage lenders by arranging for the sale of $100 million worth of real estate at inflated prices, and then siphoned the overpayments to bank accounts she controlled,” the U.S. attorney said in the statement.
     “She created false loan applications on behalf of straw buyers, then arranged for her co-conspirators to create fake documents in support of those applications, including W-2 forms, pay stubs, bank statements, and other records. According to Armstrong’s accountant and tax preparer, Audrey Yeboah, who pled guilty in October 2012 to participating in the same scheme, Armstrong collected over $14.5 million in kickbacks from the fraudulently obtained mortgage loans.
     “Armstrong joins defendants Teresa Rose, a Ramona real estate agent; Seattle businessman Justin Mensen; and Yeboah; each of whom has pled guilty to participating in the scheme. These defendants admitted that they carried out their scheme by recruiting ‘investors’ through the Internet and advertisements in the L.A. Times, and offering them the opportunity to purchase homes located in Southern California, Washington state, and elsewhere. In reality, these so-called ‘investors’ were nothing more than straw buyers who were promised $10,000 for each property purchased as part of the scheme. The defendants were able to secure mortgages for the properties by falsifying loan applications for the straw buyers, falsely claiming exorbitant income from fake employers and using fake W-2s and pay stubs to support the claims. The defendants submitted these fraudulent loan applications to mortgage lenders to obtain 100 percent financing-and thus avoided having to make any down payment on the properties.”
     The straw buyers defaulted, and lenders and secondary purchasers, including Fannie Mae and Freddie Mac, lost “up to $20 million,” prosecutors said.
     Armstrong pleaded guilty to all five counts of conspiracy, wire fraud, money laundering, and conspiracy, the U.S. Attorney’s Office said.
     Awaiting trial are John Allen, 44, of Laguna Hills, and William Fountain, 57, of Los Angeles. Their trial is scheduled to begin on Nov. 5.
     If convicted, Armstrong faces up to 5 years for conspiracy to commit wire fraud and launder money, 20 years for wire fraud, and 15 years for each of three counts of money laundering, plus a total of $1 million in fines or twice the amount she stole.

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