6 indicted in Oregon mortgage fraud scheme

By WILLIAM McCALL

PORTLAND, Ore.

Six people have been indicted on federal charges involving an alleged $3.5 million mortgage fraud scheme while working for the Lighthouse Financial Group in the Portland metro area.

Joel Rosabal and Chad Amsden, both 31, were named in the first of two indictments, while the second indictment listed Amsden, Timothy Hills, 30, Misti Wallis, 32, Gerald Wallis, 42, and Jo Schermerhorn, 50.

Rosabal and Amsden were accused of a conspiracy to defraud lending institutions by making false statements to get home loans at an inflated price, resulting in kickbacks.

The federal grand jury indictment also accused Rosabal and Amsden of using various professionals to carry out their conspiracy, including licensed real estate agents, home builders, loan officers and tax preparers.

The lending institutions that were defrauded included First Franklin Corp., Decision One Mortgage, Hyperion Capital, Millennium Funding and Ace Mortgage.

The amounts listed in a separate section of the indictment alleging wire fraud against the pair ranged from about $89,000 to more than $543,000.

In the second indictment, Amsden and the other defendants were accused of making false statements to the former Washington Mutual Bank, or WAMU, to obtain a $664,000 construction loan using the name of the mother of Misti Wallis because of her high credit score.

Federal prosecutors said the complicated scheme was carried out from early 2006 through mid-2007 before it was discovered by Internal Revenue Service criminal investigators.

All but Schermerhorn appeared in federal court Wednesday to plead not guilty before they were released pending a tentative trial date of July 20. All live in the Portland area.

The indictments were the latest in a series of mortgage fraud cases prosecuted by the U.S. Attorney's office in Oregon since the housing bubble burst with the recession.

In 2008, the U.S. Justice Department launched a national crackdown on mortgage fraud that was dubbed "Operation Malicious Mortgage" and resulted in more than 400 arrests for losses to homeowners and other borrowers the FBI estimated at over $1 billion.