Two mortgage brokers were sentenced to prison Thursday for lining up fraudulent loans to build homes on Smith Mountain Lake, cheating banks out of at least $11 million.
Timothy Scott Brooks, the owner of SB Mortgage Consultants, and Adam Nash Spruill, a broker for the company, each received three-year terms from U.S. District Judge Norman Moon.
It was the actions of people like Brooks and Spruill that brought about the national housing market collapse, Assistant U.S. Attorney Charlene Day said.
The loans in question were actually arranged by someone associated with Genesis Mansion, a Moneta-based construction company. Genesis Mansion is named by prosecutors in court filings, but no one affiliated with the company has been charged.
By using straw purchasers recruited by Brooks and Spruill, the company obtained loans in 2006 and 2007 to build the lake homes, in part by falsely inflating the income and assets of the people who posed as the buyers, prosecutors said in court filings.
The scam involved about 30 properties, most of them in the Moneta area of Bedford County and valued at between $400,000 and $600,000.
"Scott and Adam were not the ones that came up with this plan, it was brought to them by someone else," said Leigh Drewry, a Lynchburg attorney who represented Brooks.
"There were other individuals higher up than them in the chain who also suffered from greed."
In Lynchburg's federal court Thursday, Day said authorities are continuing to pursue other suspects, with Brooks and Spruill assisting the investigation.
Brooks, 40, of Lynchburg and Spruill, 33, of Forest were allowed to report later to federal prison.
The two men received commissions from Genesis Mansion that totaled about $100,000 each for finding people with good credit ratings to qualify for loans, federal prosecutors alleged.
In loan applications, the incomes of the straw purchasers were inflated to qualify them for homes they could not afford and never intended to live in.
In one case, a tattoo parlor employee was listed as making $180,000 a year.
For agreeing to have the loans in their names, the straw purchasers were paid $5,000 upfront and promised 10 percent of the proceeds once the house was built and sold. Genesis Mansion agreed to make the payments on the loans.
"Some we believe were truly innocent and some we believe were aware of everything," Day said of the straw purchasers.
In court Thursday, prosecutors said they are continuing to investigate an uncharged co-conspirator and seven to 10 other targets.
After paying the straw purchasers and Brooks and Spruill, Genesis Mansion kept the remaining proceeds from the loans, prosecutors allege.
A phone listing for the company has been disconnected.
As part of their sentences, Brooks and Spruill were ordered to pay restitution of more than $11 million to PNC Bank, GMAC Mortgage, HSBC Holdings and the Federal Deposit Insurance Corp. Should other people be convicted in the case, they would have to assist in the repayments.
02 Sep, 2011--
Source: http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNFbG2q9aVlB3Bvs3RGcT1jc9T6AQg&url=http://www.roanoke.com/news/roanoke/wb/297587
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