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KANSAS CITY, Mo.
A former Lee's Summit real estate agent will spend 20 months behind bars and must pay more than $5.6 million in restitution for a mortgage fraud scheme that left banks holding bad loans and caused property values to plummet.
Angela R. Clark, 42, was one of 19 defendants who have pleaded guilty and been sentenced for their roles in the $12.6 million scheme spanning February 2005 to May 2007. The scam involved inflated loans and resulted in homes sitting vacant for extended periods of time.
Clark was sentenced Monday in federal court in Kansas City.
Federal prosecutors said Clark sold new homes for Raymore builder Jerry R. Emerick, 41, at inflated prices, and helped buyers get mortgages far exceeding the value of the 25 upscale homes involved.
Clark orchestrated the scheme, prosecutors said, in which 15 buyers took out loans for more than the actual sale price of the homes, then kept the additional loan proceeds. Title companies received false invoices that showed payment was due to business entities that were actually shell companies created to conceal the fact that buyers were receiving cash back from loan proceeds.
Prosecutors said buyers received kickbacks of about $100,000 on each home. Clark received more than $400,000 in commissions and other payments because of the inflated prices.
All of the fraudulent loans went into default and were foreclosed, the U.S. Attorney's Office in Kansas City said Monday.
The impact of the scheme on nearby neighborhoods was devastating, prosecutors said, because the homes sat vacant without being maintained for long periods.
"Lawns were not mowed and property values deteriorated," prosecutors said in a news release. "There were multiple foreclosures in the neighborhoods, and legitimate homeowners were unable to sell their properties, while at the same time property tax assessments increased because of the inflated sales prices. The properties were eventually sold post-foreclosure to third parties, with a net loss of more than $5.6 million."
Emerick, who owned and operated Ty Construction and Residential Contracting LLC, was sentenced to 2 1/2 years in prison and ordered to pay restitution of more than $5 million for his role in the scheme. He previously pleaded guilty to conspiracy to commit mortgage fraud and wire fraud, and to transferring funds obtained by fraud across state lines.
Prosecutors said buyers received more than $2.3 million in kickbacks without the lenders' knowledge.
While investigating the scheme, FBI agents discovered that a California woman and Florida man helped at least three of the defendants build false credit histories that allowed them to obtain millions of dollars in mortgage loans.
Those three defendants -- all of whom also have been sentenced -- used false Social Security numbers to artificially raise their credit scores, allowing them to purchase six of the homes worth more than $2.7 million, prosecutors said.
"Local FBI agents dug deeper into a mortgage fraud scheme that resulted in a multimillion dollar loss in the Lee's Summit area," U.S. Attorney Beth Phillips said last year when discussing the credit fraud aspect of the scheme. "By digging deeper into that mortgage fraud scheme, investigators uncovered a second scheme, a credit history fraud scheme that was operating in the shadows of the mortgage fraud scheme."