The newest twist in a long-running federal mortgage fraud case was revealed Thursday as a “Bank Bribery Scheme,” in which prosecutors said three Bank of America or Wachovia employees pulled in bribes of as much as $55,000.
Federal prosecutors announced the scheme as they unsealed indictments against 10 more defendants in the serpentine case, part of a broader federal crackdown on mortgage fraud.
The nationwide “Operation Stolen Dreams” has involved 1,215 criminal defendants, including 485 arrests, officials said Thursday in Washington. Losses are estimated at more than $2.3 billion.
The FBI is working more than 3,000 mortgage fraud cases, almost twice as many as two years ago. Fraud helped fuel the nation’s foreclosure crisis.
“Mortgage fraud ruins lives, destroys families and devastates whole communities…,” Attorney General Eric Holder said.
In Charlotte, prosecutors showcased Operation Wax House, which has now produced charges against 35 people since the first in November 2008.
Of those 35, 25 had previously agreed to plead guilty, including 10 in the last week.
The latest defendants have been indicted, indicating they do not have plea deals.
From the beginning, prosecutors have said the mortgage fraud involved seven pricey subdivisions in Union and Mecklenburg counties. The investigation has touched every step of the mortgage process. Defendants include a real estate agent, an appraiser, a builder, buyers, mortgage brokers and attorneys.
Prosecutors have said the victims were banks that loaned money for the homes.
Thursday’s court documents detail allegations of nearly $11 million in fraudulent deals for eight Waxhaw houses, all forced into foreclosure or distressed sale at a steep loss.
Participants in the fraud agreed to buy homes at one price from builders, arranged buyers at a higher price and then lied to get mortgages at the higher level, according to court documents. Prices were generally inflated by $200,000 to $500,000. At closing, the difference between the two prices was shared by fraud participants.
The deals occurred mainly during 2006 and 2007.
Prosecutors have identified five “cells” of fraudsters. Thursday’s charges involve participants in Cell No. 2.
Each of the 10 is charged with at least one count of bank fraud or bank bribery, each of which carries a maximum prison sentence of 30 years. In addition, each is charged with at least one count of mortgage fraud conspiracy or bank bribery conspiracy, which each call for a maximum sentence of 5 years. Other charges include perjury, identity theft and money laundering.
At least five of the new defendants were connected to the “Bank Bribery Scheme,” which took place from September 2007 through January 2008, the filing said.
In those cases, mortgage fraud participants and unidentified others paid bribes of $4,000 to $55,000 to three bank employees and others for false letters of credit. The documents, typically used by businesses, can be used for such activities as obtaining other financing or guaranteeing payment for goods.
Landrick O.A. McClain, 47 of Silver Spring, Md., is described as the “leader and primary financier” of the scheme. He owned a Washington financial services firm, Credit Risk Re Limited. As of Thursday, an arrest warrant was pending for him.
Ericka L. Flood, also known as Ericka Lomick, 35, of Charlotte, is described as a go-between for McClain, the bank employees and others.
She also is called a promoter in the fraud case and was a mortgage broker for several Charlotte companies. She controlled the Kashmir Group, which was allegedly used to receive money from the scam. For example, in one sale, Kashmir allegedly received $409,000.
Flood, like the bank employees, was released on bond with the condition she not work in the banking, financial services and mortgage industries.
McClain, Flood and unidentified others allegedly paid bribes to the indicted bank employees, who are no longer with the banks. They are:
Jamilia N. Brown, 29, Charlotte. Brown, was an assistant branch manager for Bank of America’s Cotswold branch and allegedly accepted a bribe of $55,000 for a fake letter of credit.
Vic F. Henson, whose maiden name was Vic F. Gray, 41, Charlotte. Henson was a Bank of America branch manager in Charlotte who allegedly participated in both the mortgage fraud and bribery schemes. Henson allegedly received two bribes totaling $38,000. She also arranged to “falsely verify” a deposit for a “fraudulent loan application for a buyer whose identity was stolen” and used to apply for loans, according to documents.
Bonnie S. Ramey, 43, Charlotte. Ramey worked at a Wachovia branch in the Ballantyne area and allegedly accepted a bribe of $9,000 in cash for producing a bogus letter of credit from the bank. The $468.5 million letter of credit was issued “as a guarantee that a Swiss entity would carry out certain contractual obligations in Iceland.” The relation to the mortgage fraud is not explained. The bank couldn’t immediately comment on the alleged transaction.
Anne Tompkins, U.S. attorney for North Carolina’s Western District, which includes Charlotte, noted the wide impact of mortgage fraud and pledged that “investigating and prosecuting these cases will continue to be a top priority for this office.”