Baltimore Pair Sentenced In Connection With Mortgage Fraud Scheme

Posted by Patrick Barnard on November 22, 2013 No Comments
Categories : Mortgage Servicing

Kimberly Eileen McMillian, 46, of Baltimore, Md., was sentenced to two years in prison, followed by five years of supervised release, in federal court in Baltimore for wire fraud in connection with a fraud scheme involving more than $1 million in fraudulently obtained mortgages.

U.S. District Judge George L. Russell, III, also sentenced co-defendant Glenroy E. Day, Sr., age 73, of Oxon Hill, Md., to two years' probation, with the first year to be served in home confinement. In addition, Day is to perform 200 hours of community service during his second year of probation.

McMillian and Day must also pay $1,028,003 and $540,000 in restitution, respectively.

According to a Department of Justice press release, the pair's scheme worked as follows:

� in 2007, McMillian told a man who had bought three houses in Baltimore and had finished renovations on two of them, that she had clients from the New York area who were interested in purchasing the properties. When he agreed to sell, McMillian submitted loan application packages to a loan officer at a mortgage corporation in connection with the three properties, as well as a fourth property. The four loan application packages were subsequently approved.

The government's investigation revealed that virtually all of the information submitted in the four loan packages was false. In two cases, the purported buyers were individuals who had already returned to their home countries or planned to do so in the near future; the other two "buyers" listed on the loan applications were either stolen or fictitious identities. In none of the four cases was there a real individual who actually intended to live in the properties and make the mortgage payments on them. Moreover, the representations made and the supporting documentation provided on each loan application relating to the employment, income, and financial assets for each purchaser were likewise false.

McMillian arranged to have Day, an unlicensed appraiser, prepare the appraisal reports on all four properties because she knew he would provide an appraisal at the specific contract price without regard to the actual condition or value of the property. For two properties located at 2243 Madison Ave. and 2359 McCulloh Ave., Day admitted that he falsely represented that both properties had been recently upgraded and renovated. Day further admitted that these two appraisals also included interior photographs that were actually taken in completely different and thoroughly renovated houses. Day's appraisals indicated that each of the four appraisals had been reviewed and approved by a licensed appraiser, but the individual specified has denied that he saw or reviewed any of the four appraisals.

Based on the false information provided relating to the four ‘buyers’ and the condition and market value of the properties, the mortgage company agreed to extend financing on each of the four properties, totaling $1.094 million in all.

McMillian received a total of approximately $278,000 from the four transactions at the closings, although she in turn transferred $122,000 of the settlement proceeds to another individual and an associate's business checking account. Day received approximately $2,000, which he had charged for preparing the four appraisals.

Following the closings, the mortgage on each property soon went into default. Typically, either no mortgage payments were made at all, or only a couple of payments were made.

To read the DOJ's full release, click here.

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