Redding, Calif., Man Gets Four Years In Prison For Mortgage Fraud Scheme

Posted by Patrick Barnard on November 15, 2013 No Comments
Categories : Mortgage Servicing

Brandon Hanly, 33, of Redding, Calif., has been sentenced to four years in federal prison for his role in a mortgage fraud scheme, the U.S. Department of Justice (DOJ) reports.

According to the DOJ, Hanly and co-defendants Jerad Maggi and Douglas Heald from September 2005 to April 2006 participated in a scheme to defraud mortgage lenders. Maggi and Heald have pleaded guilty and another defendant, Joshua Gervolstad, also pleaded guilty in a related case.

The object of the scheme was to get cash out of a house beyond its equity while still appearing to be ‘rate and term’ refinancing, which changes only the interest rate and length of the loan but does not result in cash out to the borrower. A ‘rate and term’ loan is typically easier to obtain than a cash-out loan.

According to the DOJ's release, the defendants were able to get large loans because they provided the lender with altered appraisals, inflated by up to $350,000. The title reports were altered to place a fake lien on the title in the name of a shell company, TPG Investments Inc.

The defendants then gave the lender and escrow officer instructions to pay off the lien to TPG. Gervolstad controlled TPG and used it to direct the cash to himself, Hanly and the other participants in the scheme, federal prosecutors alleged.

Although Hanly testified at trial that he was a victim of the scheme, evidence showed that he personally received more than $300,000 as a result of his participation, according to the DOJ.

Hanly was indicted in 2010 as a result of ‘Operation Stolen Dreams,’ a major mortgage fraud sweep conducted by the FBI and other law enforcement agencies.

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