Mesa brothers get prison in $28M mortgage fraud scheme

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Stucco-housesScott and Kevin Lee made millions through their family business. Authorities said their business was mortgage fraud.

The two brothers pleaded guilty to orchestrating a $28 million loan scheme through their Mesa company, Summit Capital.

A federal judge last week sentenced Kevin Lee to a year in prison, making him the last of five conspirators sentenced for defrauding dozens of banks on loans for 34 Arizona properties.

The cases date back to 2005 and the heydays of Arizona's real estate boom, when banks and mortgage companies couldn't process paperwork fast enough to keep pace with the home buying demand.

By the end of the decade, when the boom had turned to bust, the Valley was ground zero for a string of mortgage-fraud cases that plagued the industry and led to a nationwide crackdown.

State and federal authorities targeted buyers, loan officers, title-company officials and others in cases that ranged from cash back and so-called flipping schemes to loan-modification boiler rooms that falsely promised to ameliorate debt for fees.

The Lees not only admitted creating false loan applications, but also pocketing about $1.5 million in commissions from the loans.

"Through Summit Capital, Scott Lee and Kevin Lee originated dozens of fraudulent loans by providing false information on loan applications, forging signatures, and creating false financial and construction-related documents," according to officials with the Arizona U.S. Attorney's Office.

Summit Capital specialized in high-end residential mortgage loans and custom-home construction loans. Federal court documents show the Lees defrauded dozens of financial institutions and obtained $28.3 million in loans.

The properties involved homes and land throughout the Valley, including: Anthem, Apache Junction, Chandler, Gilbert, Litchfield Park, Mesa, Queen Creek and Scottsdale. There was an additional property in Show Low.

Banks lost as much as $10 million on the loans, authorities said.

Scott Lee, 46, who owned Summit, said the scheme started with making false statements on loan documents and evolved into creating complete forgeries.

"I began defrauding financial institutions and individuals by obtaining residential mortgage and custom-home construction loans using false statements and representations on loan applications," Scott Lee admitted in a plea agreement last year.

Kevin Lee, 35, who worked for his brother along with other family members, said he taught his brother how to use computer software to falsify the documents.

In a January plea agreement, Kevin Lee said he helped his brother: Sign the names of buyers on applications; falsify buyers' incomes, assets, and liabilities; alter or create bank statements for buyers; and cook up construction contracts, invoices and inspection forms.

However, Kevin Lee said he drew the line at creating bogus documents for three operators of a development company called The Reserve at Greenfield, who sought Summit's assistance in obtaining fraudulent loans.

Authorities said eight of the 34 fraudulent loans were set up for The Reserve partners.

Chad Kennedy, 43, Shalynn Loar, 43, and Jackson Skousen, 42, all of Gilbert, pleaded guilty last year to using their residential and commercial development companies to get bogus loans through Summit.

Authorities accused Kennedy, Loar and Skousen of tapping their wives to act as straw buyers on various property purchases that the three jointly owned. For instance, Kennedy's wife bought property he owned with Loar and Skousen, according to the 2013 indictment.

Court records showed the trio operated as many as 31 different companies in these ventures. They split the proceeds from the sales and used the money for personal and business expenses, authorities said in the indictment.

Kennedy was sentenced to nine months in federal prison and three years probation.

Loar and Skousen were sentenced to five years of probation and six months of home confinement.

Scott Lee was sentenced to up to five years prison and five years probation.

All were also ordered to pay restitution to lenders.


Article From:- https://www.azcentral.com

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