Two Admit Roles in Mortgage Fraud Conspiracy and Money Laundering
|U.S. Attorney’s Office February 27, 2013|
CAMDEN, NJ—A former property manager admitted today to conspiring to defraud financial institutions and launder stolen funds as part of a $15 million mortgage fraud scam that used phony documents and “straw buyers” to make illegal profits on overbuilt condos, U.S. Attorney Paul J. Fishman announced.
Last week, a Georgia man also admitted to conspiring to defraud financial institutions and launder stolen funds as part of the same scam.
Timothy Ricks, 45, of East Orange, New Jersey, pleaded guilty today to a superseding indictment charging him with one count of conspiracy to commit wire fraud and one count of conspiracy to commit money laundering. Orlando Allen, 47, of Fayetteville, Georgia, pleaded guilty to the same crimes on February 20, 2013. Both Ricks and Allen entered their guilty pleas before U.S. District Judge Jerome B. Simandle in Camden federal court.
According to documents filed in this case and statements made in court:
Ricks and Allen were among 11 defendants arrested in July 2012 and charged with conspiracy to commit wire fraud and conspiracy to commit money laundering. Ricks and his conspirators located oceanfront condominiums overbuilt by financially distressed developers and negotiated a buyout price with the sellers. They then caused the sales prices for the properties—located in Wildwood Crest and North Wildwood, New Jersey, other locations in New Jersey, and in Naples, Florida—to be much higher than the buyout price to ensure large proceeds. Other defendants helped conceal the true sales prices of certain properties through inflated sales contracts and sale and finder’s fee agreements.
Ricks and Allen recruited straw buyers to purchase those properties at the inflated rates. The straw buyers had good credit scores but lacked the financial resources to qualify for mortgage loans. The conspirators created false documents, such as fake W-2 forms, pay stubs, bank statements, and investment statements, to make the straw buyers appear more creditworthy than they actually were in order to induce the lenders to make the loans.
Ricks and his conspirators caused fraudulent mortgage loan applications in the name of the straw buyers, including the supporting documents, to be submitted to mortgage brokers that the brokers knew were false. Once the loans were approved and the mortgage lenders sent the loan proceeds in connection with real estate closings, Ricks and his conspirators took a portion of the proceeds, having funds wired or checks deposited into various accounts they controlled. They also distributed a portion of the proceeds to other members of the conspiracy for their respective roles.
The wire fraud conspiracy charge carries a maximum potential penalty of 30 years in prison and a $1 million fine. The money laundering conspiracy charge carries a maximum potential penalty of 10 years in prison and a $250,000 fine. Ricks’ sentencing is scheduled for November 8, 2013. Allen is scheduled to be sentenced August 8, 2013.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Acting Special Agent in Charge David Velazquez in Newark; and IRS–Criminal Investigation, under the direction of Acting Special Agent in Charge Shantelle P. Kitchen, Newark Field Office, for their roles in the ongoing investigation.
The government is represented by Assistant U.S. Attorney Matthew T. Smith and Attorney in Charge R. Stephen Stigall of the U.S. Attorney’s Office Criminal Division in Camden.