Thursday, October 31, 2013

Corruption: Philadelphia - Pastor gets more than 14 years in $6 million mortgage fraud

U.S. Attorney’s Office 
Eastern District of Pennsylvania

PHILADELPHIA—Michael Wilkerson, 47, of Pottstown, Pennsylvania, was sentenced yesterday to 170 months in prison and ordered to pay $1,353,111.93 in restitution for a mortgage fraud scheme. Wilkerson and his co-defendants defrauded JPMorgan Chase Bank N.A. by fraudulently obtaining home loans valued at more than $6 million for properties located in Schwenksville and Glenmoore, Montgomery County, Pennsylvania. Wilkerson was convicted at trial in February.

Wilkerson, a pastor at New Millennium Life Restoration Fellowship with locations in Phoenixville and Spring City, recruited one of his congregants and the congregant’s family and friends to participate in a number of real estate transactions. If they had good credit and acted as “straw purchasers”—meaning they would sign loan documents as the purchaser of a house and attend the property settlement—Michael Wilkerson would pay them $15,000. Wilkerson paid another $5,000 if they referred other straw purchasers to him. Wilkerson recruited at least six individuals who agreed to be straw purchasers of homes. Wilkerson’s wife, Joyce, participated in the fraud scheme by explaining the transactions to the straws, paying the straws, and also pretending to be a co-purchaser of each of the homes at the time of settlement. Co-defendant Lee Garell, a real estate broker with Long & Foster Companies, prepared the sales paperwork for each of the homes that was sold to the straws and, along with Michael Wilkerson, dictated the fraudulent terms set out in the settlement sheets. Denise Haines, a mortgage broker with American Group Mortgage Corporation, submitted fraudulent loan applications in the transactions to Chase. The applications falsely represented the appraised value of the homes, the identification of the straws, the source of funds, the borrower’s income and assets, and their intent to take possession of the homes as their primary residence. Based on the representations made in the loan documents, Haines knew she could get Chase to approve the loans without verification of the information on the loan applications. Haines and Garrell are awaiting sentencing.

When the loans were funded at the time of settlement, Michael Wilkerson, Joyce Wilkerson, Lee Garell, and Denise Haines manipulated the documents prepared at settlement and later forwarded the settlement documents to Chase to make it appear to the bank that the straws brought considerable cash to the closings, when, in fact, all the money involved at the settlement actually came from Chase. Michael and Joyce Wilkerson profited approximately $400,000 from each of the fraudulent sales. Lee Garell obtained commissions on the sales of the real estate and Denise Haines obtained commissions based on the amount of the million dollar loans obtained from Chase. After settlement on the homes, Michael Wilkerson took possession of all the homes, rented two of them, and lived in another. He paid the mortgages with the money that he obtained at the settlements and rental income for approximately six months then told the straws purchasers that they had to pay the mortgages. This last act led to the loans falling into default and then foreclosure, resulting in a loss of approximately $3 million.

The case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Anita Eve.

President Obama established the Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch and, with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.