U.S. Attorney, SC agencies target mortgage fraud

MYRTLE BEACH, SC (WIS) - A nationwide mortgage fraud sweep organized by President Barack Obama is being pegged as the largest of its kind, and now eight agencies are teaming up to directly target the problem in South Carolina.

The "Operation Stolen Dreams" sweep was initiated by President Obama and the Financial Fraud Enforcement Task Force. The goal of the operation, according to the Department of Justice, is to lead an "aggressive, coordinated and proactive effort to investigate and prosecute financial crimes."

Since the inception of the program on March 1, Operation Stolen Dreams has netted 1,215 national criminal defendants, resulting in 485 arrests that are responsible for an alleged $2.3 billion in losses.

U.S. Attorney William Nettles and representatives from the eight agencies gathered Thursday at Francis Marion University to outline exactly how they'll be putting an end to mortgage fraud across the state. While the problem is widespread, officials say much of their attention will be focused on the Grand Strand.

"We have found a lot of fraud in Myrtle Beach," Nettles stated. "Because we've found a lot of fraud there, we are going to continue to be there. We're going to have a presence in Myrtle Beach."

Officials say they have identified several cases of the particular type of fraud in Myrtle Beach. The area has been tabbed as "vulnerable" for those trying to cheat the system for a deal.

There are also several Midlands connections to the rash of mortgage fraud. In late April, a Chapin real estate developer pled guilty to defrauding the Royal Bank of Canada, J.P. Morgan Chase Bank, Plantation Federal Bank, and SunTrust Bank.  

Officials say Kenneth Holmes arranged for the sale of seven houses in Surfside Beach, Garden City, and Murrell's Inlet to investors brought in by mortgage brokers. Holmes and the mortgage brokers agreed on an actual sales price for the property, but submitted false documents making it appear the houses were worth more than they actually were. Authorities say Holmes and his co-conspirators shared in about $1,680,000 in profit.

In late March, a Columbia man was sentenced to eight years in prison for mortgage fraud. Officials say in 2008, Randall Antoine used the personal information of over 500 people to get about $4.75 million in fraudulent loads.
Antoine's scheme involved posing as a mortgage broker and applying for down payment assistance funds issued by companies to home buyers who need help with making a down payment on a home. He used money obtained from later applications to pay off earlier loans for about six months until the scheme collapsed.

Although a car Antoine bought with the proceeds of his scheme was forfeited, the money Antoine had stolen through his scheme was not recovered. Records indicate Antoine spent the proceeds of his fraud on a lavish lifestyle full of trips and vacations as quickly as he stole it.

A Kershaw County woman was sentenced in May to a year in jail for participating in a conspiracy to falsify loan applications. Officials say Christie J. McGougan, 41, of Bethune, and her business partner sold modular and existing homes in the Lugoff-Camden area under the name Magnolia Bay Homes.

Magnolia Bay Homes told buyers they did not have to make a down payment to buy a house, but banks required down payments from the buyers to approve mortgage financing and relied on closing statements prepared for each transaction to determine if the buyer was making a down payment.

To deceive the banks to make the mortgage loans, McGougan made out cashier's checks in the names of the buyers to make it look like buyers were making the down payments. Many of the houses in this case ended up in foreclosure, and most of the buyers ultimately declared bankruptcy. The overall loss from all the transactions is approximately $750,000.

Operation Stolen Dreams targets mortgage defrauders throughout the U.S. and is known as the largest collective effort to put a stop to mortgage fraud.

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