The Associated Press May 21, 2010, 6:20PM ET

Calif. homebuilder agrees to plea in fraud ring

A Northern California homebuilder has agreed to plead guilty to charges he artificially inflated the prices of 62 new homes as part of a sprawling mortgage fraud scheme that triggered an international manhunt, according to federal court documents filed Friday.

In the plea agreement detailed by U.S. Attorney Benjamin Wagner, Anthony Symmes, 59, acknowledged he sold homes to an unlicensed Sacramento mortgage broker when housing prices began to fall in late 2006.

That broker was Garret Griffith Gililland, who three years ago fled the country and was arrested in Spain.

Gililland is awaiting trial and has pleaded not guilty to 24 charges alleging he participated in a $100 million mortgage fraud ring in California and other states.

Symmes, who is the largest homebuilder in the Northern California city of Chico, has agreed to cooperate in the Gililland investigation.

Wagner said Gililland approached the homebuilder in the fall of 2006 and offered to buy the homes using a network of so-called straw buyers to defraud lenders. The pair agreed to raise the home prices between $40,000 to $60,000, with Gililland pocketing some of the extra cash and paying back investors he used as straw buyers to qualify for the loans.

"The market goes down, he's saddled with a lot of properties he wants to get rid off," Wagner said about the homebuilder. "He finds straw buyers to dump the properties on other people."

Lenders have foreclosed on 38 of Symmes' homes and finalized 10 short sales, costing them roughly $5 million, Wagner said.

The Internal Revenue Service has said Gililland and two others defrauded investors and mortgage companies in deals involving 500 homes and condominiums in California and other states.

Wagner said the investigation into Gililland and others involved in the mortgage ring is ongoing. He declined to say how many other individuals might be connected with the fraud.

Symmes, of Paradise, faces 20 years in prison for one count of mail fraud and 10 years in prison for a count of money laundering. He has already paid $4 million in restitution to the U.S. Treasury as part of his plea agreement.

Symmes' plea agreement was one of three cases involving mortgage fraud announced Friday by federal prosecutors. Wagner, who is co-chairman of a national mortgage fraud task force, said the Obama administration has targeted mortgage fraud cases in the aftermath of the housing crisis.

"Mortgage fraud covers a lot of different types of things," Wagner said. "As the market changes, the schemes have changed and we're trying to get our arms around it."

The second case announced Friday involved a Sacramento mortgage-flipping venture that federal prosecutors said was orchestrated by a local real estate agent and loan officer.

Prosecutors said real estate agent Lawrence Davis, 26, associate Joel Clark, 27, and loan officer Eric Mortenson, 28, recruited home buyers with the promise of cash-back on their purchases so they could upgrade homes and flip multiple properties at a profit.

Mortenson submitted false loan applications totaling more than $6 million on behalf of four buyers who had previously been unsuccessful in getting home mortgage loans, according to the indictment. Lenders lost more than $2.6 million when they foreclosed on all 13 properties, Wagner said.

The third case targeted a "foreclosure recovery" scheme in which homeowners in financial distress signed over the deeds to their homes. In exchange, homeowners were told they could lease their homes and buy them back in two years.

Jeremiah Andrew Martin, 32, of San Antonio, and Redding residents Darrin Arthur Johnston, 45, and Todd Allen Smith, 47, pocketed the rental payments instead of paying off the loans, Wagner said.

Escrow officer Cheryl Ann Hitomi Peterson, 47, used her notary status to give the appearance of legitimacy. All four individuals were indicted on charges to commit mail fraud and money laundering.


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