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y falsified, forged, and altered documents. Many of the fraudulently originated loans were sold to Fannie Mae, which lost approximately $1.3 million from defaults associated with the loans. This was a joint investigation with HUD-OIG and FDIC-OIG. A $20 Million Mortgage Fraud Scheme, San Diego, California On April 25, 2013, Mary Armstrong pled guilty to wire fraud, money laundering, and conspiracy. As a result of her plea, Armstrong was sentenced to 100 months of incarceration and 36 months of supervised release. On May 6, 2013, William Fountain pled guilty to conspiracy to commit wire fraud and money laundering. As a result of his plea, Fountain was sentenced to 42 months of incarceration, 36 months of supervised release, and $532,687 in restitution. On June 17, 2013, John Allen pled guilty to conspiracy to commit wire fraud and money laundering. As a result of his plea, Allen was sentenced to 1 year and 1 day of incarceration and 36 months of supervised release. All pleas and sentences occurred in the U.S. District Court for the Southern District of California. With the help of her co-conspirators, Armstrong, an unlicensed mortgage broker, operated a nationwide loan origination fraud and kickback scheme, defrauding lenders through the sale of $100 million of real estate at inflated prices. She siphoned overpayments to bank accounts she controlled and collected up to $14.5 million in kickbacks. Purchasers of her fraudulently originated loans, including the enterprises, suffered losses of up to $20 million. This was a joint investigation with the FBI. Mortgage broker sentenced to 100 months incarceration. Suspended Real Estate Agent and Six Conspirators Indicted, Kansas City, Kansas On April 23, 2013, in the U.S. District Court for the District of Kansas, Manjur Alam was indicted for conspiracy, wire fraud, bank fraud, and money laundering; Janice Young, Bruce Dykes, Christopher Ginyard, Henry Pearson Sr., and Steven Pelz were indicted for conspiracy and wire fraud; and Henry Pearson Jr. was indicted for conspiracy. On September 3, 2013, Pearson Sr., Ginyard, and Young pled guilty to wire fraud, and Pearson Jr. pled guilty to bank fraud. Dykes pled guilty to wire fraud on September 5, 2013. From 2006 to the present, Alam and his conspirators allegedly schemed to sell properties using bogus sellers, buyers, and documentation. Several loans involved in their scheme were purchased by the enterprises. This was a joint investigation with IRS-CI and HUD-OIG. Recruiter, Escrow Officer, Builders, and Loan Officers Charged, Dallas, Texas On April 11, 2013, in the U.S. District Court for the Eastern District of Texas, Lawrence Day was indicted for conspiracy to commit wire and mail fraud, wire fraud, aggravated identity theft, and aiding and abetting; Donna Cobb, Bryan Scott, and Donald Mattox were indicted for conspiracy to commit wire and mail fraud; and Michael Edwards and Scott Sherman were indicted for wire fraud and conspiracy to commit wire and mail fraud. From September 2005 through July 2008, the defendants allegedly conspired to defraud lending institutions by using material misrepresentations Semiannual Report to the Congress • April 1, 2013–September 30, 2013 27
and omissions of material fact in loan documents to induce lenders to fund mortgage loans. Day allegedly recruited buyers and helped loan officers, builders, and escrow officers to perpetrate the fraud for at least 28 properties. Financial institutions have lost $13.2 million in the scheme. Fannie Mae’s and Freddie Mac’s estimated losses total $968,000 and $130,000, respectively. This was a joint investigation with the FBI. Realtor Launders Money Through Real Estate Transactions, Dallas, Texas On April 10, 2013, realtor Stephen King and loan officer Euneisha Hearns were indicted for conspiracy to commit money laundering in the U.S. District Court for the Eastern District of Texas. On July 11, 2013, King pled guilty to conspiracy to commit money laundering. During April 2008, King, Hearns, and others allegedly conspired to launder proceeds from fraudulent real estate transactions. The fraudulent real estate transactions scheme caused a loss of $686,000 to the involved financial institutions, including the enterprises, which purchased mortgages that funded the fraudulent transactions. This was a joint investigation with IRS-CI. Real Estate Investor Falsifies Loan Documents, St. Louis, Missouri On April 4, 2013, in the U.S. District Court for the Eastern District of Missouri, Jerrick Hawkins was sentenced to 37 months of incarceration, 60 months of supervised release, and $2,392,237 in restitution, including $144,917 in restitution to Fannie Mae. Hawkins previously pled guilty to bank fraud and false statements. As a real estate investor, Hawkins supported loan applications with fraudulent documents and received substantial payments for directing buyers into loans that tended to default. The scheme involved over 14 enterprise loans and 21 FHA loans. This was a joint investigation with HUD-OIG and USPIS. Appraiser and Borrower Sentenced, Baltimore, Maryland Appraiser sentenced to 15 months incarceration and $2.4 million in restitution. On April 3, 2013, Kenneth Koehler was sentenced to 18 months of incarceration, 2 years of supervised release, and $1 million in restitution, after pleading guilty to conspiracy to commit wire fraud. On April 19, 2013, David C. Christian was sentenced to 15 months of incarceration, 3 years of supervised release, and $2.4 million in restitution, after pleading guilty to conspiracy to commit wire fraud. Both were sentenced in the U.S. District Court for the District of Maryland. Christian prepared at least 17 fraudulent appraisals for $4.3 million in loan originations. Koehler obtained fraudulent loans on six properties. The enterprises purchased many of the loans involved in the scheme and suffered losses of $3.5 million. This was a joint investigation with the FBI and USPIS. It was prosecuted by the U.S. Attorney’s Office for the District of Maryland with assistance from an OIG investigative counsel. 28 Federal Housing Finance Agency Office of Inspector General
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Page 8 and 9: A Message from the Acting Inspector
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References Federal Deposit Insuranc
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Department of the Treasury Financia
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Acronyms and Abbreviations Agency A
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Semiannual Report to the Congress
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Figure 29. Summary of OIG Recommend
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No. Recommendation Report Status AU
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No. Recommendation Report Status EV
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Audit and Evaluation Reports with R
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Appendix D: OIG Reports See www.fhf
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Appendix F: Description of OIG Offi
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Strategic Goal 2—Operating with I
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Figure 17. Federal Home Loan Banks
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15 Federal Housing Finance Agency,
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33 Fannie Mae, “Multifamily Busin
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to FHFA Scorecard Directive, at 48,
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it is preferable to limit our discu
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Position in the Housing Finance Sys
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144 Fannie Mae, “Comparison of Mu
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157 Id., “Mortgage Servicing,”
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184 Federal Housing Finance Agency,
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Transparency and Certainty for Lend
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