A Kansas City, Mo. builder has become the latest of more than a dozen people indicted in a $12.6 million mortgage fraud scheme to plead guilty to the charges.
Jerry R. Emerick, 39, of Raymore, Mo. waived his right to a grand jury and pleaded guilty on April 9 to federal charges of conspiracy to commit mortgage fraud, wire fraud, and transfer of funds obtained by fraud across state lines, according to statements issued by the Office of the United States Attorney Western District of Missouri.
The grand jury indictments issued on Oct. 29, 2008, accuse the defendants in the case of a scheme that involved home buyers obtaining inflated mortgage loans on homes built by Emerick's Ty Construction and Residential Contracting company and then pocketing kickbacks as high as $125,000 a house.
Under the plan, buyers allegedly provided false information to mortgage lenders and then created shell companies to receive kickbacks from Emerick, according to statements issued by the Office of the United States Attorney Western District of Missouri.
By pleading guilty, Emerick admitted to participating in the fraudulent loans on 22 of the residential properties, that he was aware the loan applications and supporting documents included false and fraudulent information and omissions of fact. Also, that he was aware the buyers were creating false business entities to receive the loan proceeds.
Emerick also admitted that he submitted false documentation to title companies and made fraudulent material representations to title companies in order for the buyers to receive funds from the loan proceeds. He also made payments to the buyers outside of closing.
Prosecutors said, in total, mortgage lenders approved 25 loans for more than $12.6 million between June 2005 and May 2007. From that total, buyers are accused of receiving $2.3 million from the proceeds.
Under federal statutes, Emerick could be sentenced to up to five years in federal prison without parole, plus a fine up to $250,000 and an order of restitution.
Emerick's lawyer, J.R. Hobbs, said his client "accepts responsibility for his conduct and has cooperated and will continue to cooperate," The Kansas City Star reported.
In addition to buyers, a mortgage loan officer and an independent insurance agent who insured the homes have pled guilty in the case.
Stefan M. Guerra, 30, a former mortgage officer at Midwest Equity Mortgage admitted on March 3 that he bought one home from Emerick and acted as a broker on 11 other properties involved in the conspiracy. The loans on the 12 properties totaled more than $5 million.
Leon T. Jones, 42, also admitted March 3 that he purchased a property from Emerick as part of the conspiracy, that he made material misrepresentations to the lender who made the loans totaling $509,000. He received about $50,000 from Emerick as part of the deal.
Daryle A. Edwards, 37, pled guilty on March 3, admitting he bought a home from Emerick as part of the conspiracy, and that he made material misrepresentations upon which the lender relied in making the $410,000 in mortgage loans. Edwards used a false Social Security number, a false address and false employment, and falsely claimed that he would occupy the property. He also admitted he made false representations regarding the use of loan proceeds. He received a $76,600 check from Emerick that was payable to DAECO Construction, Inc., a company he owned.
Judith W. Williams, 48, of Bunkie, La., admitted on March 17 that she purchased a property from Emerick as part of the conspiracy, and that she made material misrepresentations in the applying for the loan of $456,000. She also admitted that she received a payment of $100,150 from Emerick. The check was deposited into the bank account of People's Construction, a business entity that she used to receive those proceeds.
On January 8 Ronald E. Brown, Jr., 39, a self-employed insurance agent in Kansas City, Mo. pled guilty also to misrepresenting facts on mortgage loans on three properties totaling $1,339,700. Brown is accused of buying two false Social Security numbers for $10,000 to buy the properties. He received $279,426 from Emerick.
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