The Department of Justice announced that Kelsey Torrey Hull, 38, and Jonathan Alfred Kimpson, 27, both of Lithonia, Ga., pleaded guilty in federal district court to a conspiracy to defraud reverse mortgage lenders and the Federal Housing Administration.
Hull pleaded guilty to an additional bank fraud charge involving mortgage fraud, and Kimpson pleaded guilty to an additional identity theft charge.
“These defendants plead to profiting from the corruption of a FHA-insured program designed to assist seniors with either cash for equity in their home or with funds toward the purchase of a home,” said U.S. Attorney Sally Quillian Yates in a statement. “These defendants changed real estate records and used other fake documents to place seniors in houses worth only a fraction of the amounts represented, and divert loan proceeds to themselves. With these prosecutions, we have taken a significant step to stop this type of crime.”
Hull and Kimpson took advantage of the system by faking the required seniors’ down payments needed to qualify for the HECM for purchase product. The defendants did this through bogus “gift” letters from “relatives” in amounts between $50,000 and $105,000 said the DOJ.
They also used fake “HUD-1” Settlement Statements purporting to document the sale of the senior’s non-existent assets. All down payments were actually supplied by the defendants, not the senior citizens, to be returned to the defendants upon the reverse loan closings, along with profits substantially in excess of the true sales prices of the properties. The return of funds to the defendants were disguised as either seller proceeds or lien payoffs. All such fraudulently obtained reverse mortgages included inflated appraisals.
Kimpson’s plea to aggravated identity theft relates to his use of the stolen identity of realtors and their password to falsify Georgia Multiple Listing Service (MLS) records to create fake property listings and sales at inflated amounts in support many of the fraudulent appraisals.
Hull also committed refi-reverse fraud by transferring properties into seniors’ names to obtain refi-reverse mortgages at fraudulently inflated amounts. He thereby avoided the down payment requirement for purchase money reverses, and was able to divert loan proceeds to his shell companies, disguised as lien payoffs.
Sentencing for both Hull and Kimpson are scheduled for July 16, 2010 before US District Judge Julie E. Carnes. Hull could receive a maximum of up to 30 years in prison and a fine of up to $1,000,000 on each of the conspiracy and bank fraud counts. Simpson could receive a maximum sentence of up to 30 years in prison and a fine of up to $1,000,000 on the conspiracy count, as well as a mandatory consecutive sentence of 2 years in prison and a fine of up to $250,000 on the aggravated identity theft charge.
“HUD’s Home Equity Conversion Mortgage Program was created to help senior citizens find greater financial security through FHA-insured reverse mortgage loans,” said Kenneth Donahue, Inspector Genera for the U.S. Department of Housing and Urban Development (HUD). “The HUD Office of Inspector General will aggressively investigate those who would prey on America’s senior citizens through reverse mortgage fraud, and encourages anyone having knowledge of such schemes to contact our HUD Hotline at 1-800-347-3735.”