Missouri Man Sentenced to Nine Years in Major Mortgage Fraud Scheme
|U.S. Attorney’s Office November 17, 2009|
CAPE GIRARDEAU, MO—Robert P. Wrolstad, of O’Fallon was sentenced on a mortgage fraud scheme involving the sale of residential real estate located in Sikeston, MO, Acting United States Attorney Michael W. Reap announced today. After sentencing, the district court remanded Wrolstad to the custody of the United States Marshals to commence serving his sentence.
Wrolstad was sentenced to 108 months on a 34-count indictment for his involvement in the scheme.
Wrolstad’s co-defendant, Russell Todd McBride, who was sentenced to 135 months yesterday, was an operator of Century Mortgage and Finance, Inc., which was in the business of providing mortgage-related services, and had offices located in Sikeston, Cape Girardeau, St. Louis County, and elsewhere. As a mortgage broker, Century Mortgage would locate and obtain prospective mortgage lenders for prospective borrowers. Employees and others associated with Century Mortgage would prepare mortgage applications and supporting documents for borrowers. Then, for a fee, Century Mortgage would find a mortgage lender to make the loan. Wrolstad worked with McBride and for Century Mortgage, providing services including assisting in closing real estate transactions and working with title companies.
"Investors need to know the market and understand realistic terms and rates of return before investing," said J.R. Ball, Assistant Inspector in Charge of the U.S. Postal Inspection Service, St Louis Field Office."Victims in these types of cases often become shortsighted and only focus on front-end promises. In this case, some victims may be holding properties that will never realize their mortgaged value."
"Buying property can potentially be a good investment," said Roland J. Corvington, Special Agent in Charge of the FBI in St. Louis. "But because of unscrupulous people like Mr. McBride and Mr. Wrolstad, investors need to do some research and verify what they are buying and not have blind trust."
The scheme, which occurred from at least July 2005 and continued through November 28, 2006, involved investors recruited by McBride and Wrolstad purchasing real estate primarily located in Sikeston, Missouri. The owners of the real estate would sell the properties at or near fair market value to investors recruited by and known to McBride and Wrolstad. However, the investors paid prices significantly greater than the actual selling price received by the sellers for the properties. The investors would purchase the property at a fraudulent and overvalued price by obtaining loans to purchase the property. As part of the scheme, McBride and Wrolstad obtained appraisals, which significantly overvalued the properties, which enabled them to personally obtain inflated loan proceeds despite having no interest in the conveyed real estate.
McBride, and in some cases, Wrolstad, represented to investors that the residential real estate properties were good investment properties, that the rents would pay the mortgage, that the properties could be acquired with “no money down,” and that the properties could be sold, sometimes in approximately a year, at a profit. As part of the scheme, McBride and Wrolstad also paid monies to investors as an inducement for them to purchase residential real estate funded by loans brokered through Century Mortgage. For example, in one case a purchaser paid $66,000 for a property that the seller sold for $7,500. In another real estate transactions, the purchaser paid $54,000 for property that the seller sold for $15,000.
In many cases, purchasers of real estate secured by loans brokered by Century Mortgage did not provide closing costs or down payments to acquire the real estate. McBride and Wrolstad, and others acting on their behalf, provided the investors with the funds for the down payment and closing costs. McBride and Wrolstad also caused mortgage loan companies to send the loan proceeds by wire transfers in interstate commerce, and caused warranty deeds, deeds of trusts and other closing documents to be sent from the offices of the closing agents by commercial interstate carrier to the lenders and the Recorder of Deeds in Scott County, MO.
McBride and Wrolstad directed purchasers and closing agents to pay McBride and Wrolstad substantial sums of the mortgage loan proceeds by checks or wire transfers into their personal bank accounts or other bank accounts controlled by them.
There were approximately 341 transactions involving the sale of residential real estate located in the Eastern District of Missouri during the past six years in which McBride and Wrolstad fraudulently obtained mortgage loan proceeds causing losses to lenders and purchases of between $7 million and $20 million. Wrolstad was ordered to pay restitution exceeding $9 million to the lenders and investors defrauded and victimized by the mortgage fraud scheme.
Wrolstad was sentenced on one count of conspiracy to commit wire fraud and mail fraud, 12 counts of wire fraud and 12 counts of mail fraud. n addition, Wrolstad was sentenced on three counts of money laundering. After sentencing, the district court remanded Wrolstad to the custody of the United States Marshals to commence serving his sentence.
The U.S. Attorney’s Mortgage Fraud Task Force consists of over 70 residents of the Eastern District of Missouri involved in banking, mortgage brokerage, real estate sales, title insurance, real estate appraising, as well as federal, state, and local law enforcement, regulatory officials, and non-government organizations. Anyone wishing to report suspected mortgage fraud or participate in the work of the task force is encouraged to call the Mortgage Fraud hotline at 1-866-587-9571.
Reap praised the Postal Inspection Service, Federal Bureau of Investigation, the Internal Revenue Service, and Assistant United States Attorney Paul W. Hahn, who handled the prosecution for the government.