Woman Pleads Guilty to Lynchburg Mortgage Fraud
LYNCHBURG, VA—The former majority owner of construction company Genesis Mansions, who recruited a number of strawbuyers to defraud financial institutions of millions of dollars thorough an intricate mortgage fraud conspiracy, pled guilty today in the United States District Court for the Western District of Virginia in Lynchburg.
Susanne Helbig, 50, previously a resident of Roanoke, Va., was indicted in May 2014 on a series of federal charges related to a mortgage fraud scheme. This afternoon in U.S. District Court, Helbig pled guilty to one count of mortgage fraud conspiracy and one count of tax fraud. As part of the plea agreement entered into between the United States and the defendant, Helbig will face a period of incarceration between 51 and 121 months. In addition, the plea agreement calls for Helbig to pay $10,620,121 in restitution to the financial institutions that were defrauded and $179,593 to the Internal Revenue Service.
“Ms. Helbig and others executed a sophisticated scheme to defraud numerous financial institutions,” United States Attorney Timothy J. Heaphy said today. “Her repeated acts of recruiting straw buyers and submitting false statements to banks and other lenders allowed her to steal almost $11 million from her victims. This case demonstrates our commitment to identify and prosecute those who commit mortgage fraud, a serious crime with wide-ranging impact on the housing market.”
“Ms. Helbig’s conviction sends a powerful message to those who seek illegal profits by exploiting our nation’s mortgage industry,” said Adam S. Lee, Special Agent in Charge of the FBI’s Richmond Division. “The FBI’s commitment to identifying mortgage fraud and working with our prosecutorial, law enforcement, and industry partners to mitigate the threat is evidenced by cases like this one. We will use every investigative technique available to us to ensure the integrity of our critical commercial institutions such as mortgage lending.”
“Ms. Helbig let greed get the better of her and in doing so she victimized the financial institutions that lent her money and the honest American taxpayers that have to pay more because of her cheating,” said Thomas J. Kelly, Special Agent in Charge, IRS Criminal Investigation, Washington, D.C. Field Office. “The impact of the actions of Ms. Helbig and her co-conspirators are wide ranging and negatively affect all of us. Ms. Helbig’s guilty plea today is an opportunity for her to admit to the deception and face the consequences of her actions.”
“In addition to stealing from the lenders, criminal schemes, such as Ms. Helbig’s, victimize legitimate borrowers by making it more difficult for them to obtain mortgages. This investigation is another shining example of the great partnership that exists between local, state, and federal law enforcement agencies across the country in detecting and investigating mortgage fraud,” said Dugan Wong, Inspector in Charge of the Pittsburgh Division of the Postal Inspection Service. “
Helbig admitted today that between March 2006 and December 2007 she, and others, conspired to defraud financial institutions through the submission of false and fraudulent mortgage loan applications and settlement statements in the name of strawbuyers. Helbig, and others, took these actions to induce financial institutions to finance the purchase and construction of approximately 30 properties near Smith Mountain Lake. The fraudulent actions of Helbig, and others, caused nearly $11 million in losses.
According to evidence presented at today’s guilty plea hearing by Assistant United States Attorney Laura Day Rottenborn, Helbig was the leader of a conspiracy who, along with her co-conspirators, recruited strawbuyers to pose as purchasers for properties Helbig owned near Smith Mountain Lake. Helbig paid the strawbuyers between $5,000 and $20,000 to pretend that they had purchased property from Helbig and needed a loan to build a primary residence on the land. In reality, however, the strawbuyers had no intention of owning or living in the house and instead Helbig took the loan disbursements for herself. She used some of the money to build homes on the land, which she intended to flip and sell for substantial profit but never did. She also used the loan money to pay herself a substantial income; gave some of the money to her co-conspirators to incentivize their participation in the scheme; and took money from one loan institution to pay off debts she owed to other financial institutions.
To induce lenders to make the loans, Helbig and her co-conspirators helped the strawbuyers falsify their loan applications. The loan applications stated an artificially inflated value for the land, inflated the strawbuyer’s income and assets, misrepresented the strawbuyer’s employment, misrepresented that the property would be the strawbuyer’s primary residence, and misrepresented the true source of funds provided to the strawbuyer for closing. Helbig personally gave strawbuyers substantial sums of money to help them qualify for loans that they could not otherwise afford, as well as kickbacks to the strawbuyers for their services– without disclosing either such gifts to the lenders. In many instances, Helbig then took back the “gifts” used to inflate the strawbuyer’s assets as soon as the loan closed. Helbig further signed settlement statements and loan applications even though she knew they contained materially false information designed to trick the banks into making substantial loans. She then filed false tax returns claiming improper deductions, resulting in a grossly underestimated tax liability.
Throughout the life of the conspiracy, about a half dozen lending institutions unknowingly made over $17 million in loans to Helbig based on the false and fraudulent statements in the loan application packets. Helbig ran a Ponzi scheme, making the loan payments on properties using the loan proceeds from other loans. Meanwhile, Helbig had not completed the construction of virtually any homes. When Helbig could no longer obtain additional financing, due in part to her supply of strawbuyers drying up and the tightening of the extension of credit in connection with the mortgage crisis of 2008, she stopped making payments on the loans, causing the properties to go into foreclosure and causing the lenders substantial loss. The strawbuyers were also put into financial ruin when the defaults and foreclosures were reported negatively on their accounts with the credit bureaus.
The investigation of the case was conducted by the Internal Revenue Service-Criminal Investigations, the Federal Bureau of Investigation and the United States Postal Inspection Service. Assistant United States Attorneys Laura Day Rottenborn and Heather Carlton are prosecuting the case for the United States.