UPDATE 11/5/12 @ 9:45 p.m.
CHARLESTON, W.Va. (WSAZ) -- A multimillion-dollar mortgage fraud scheme linked to properties in Putnam County, W.Va., has ended with a sixth conviction.
Raymond Morris, 51, of Utah, was sentenced to four years and nine months in federal prison for conspiracy to commit wire fraud and bank fraud. He previously pleaded guilty in July to those charges.
Morris admitted to participating in the sophisticated mortgage fraud scheme in early 2006, along with convicted co-conspirators Deborah Joyce, 38, of Hurricane, W.Va., and Michael Hurd, 37, of Utah.
The scheme reaped nearly $2 million in lost equity from lenders in less than two years, according to the U.S. Attorney's Office.
"A lot of people around the country thought they could cheat the system and get away with it," U.S. Attorney Booth Goodwin said. "I think this sends a very clear message that this is not something that you want to do. This is something that is serious."
Six defendants were ultimately sentenced to a total of 166 months of imprisonment for their respective involvement in the fraudulent scheme.
Morris, Hurd and Joyce profited from illegally "flipping" existing homes in the Stonegate subdivision to out-of-state borrowers at falsely inflated sales prices.
Prosecutors say Morris ran a real estate investment club in Utah and persuaded investors to get what they thought was a deal but instead were losing hundreds of thousands of dollars.
"It's difficult for people to get appraisals in the Stonegate subdivision because there's this stigma associated with that subdivision now," Goodwin said. "When criminals steal from banks by taking out fraudulent loans, it's legitimate borrowers who get hurt. Mortgage fraud makes it difficult for honest home-buyers to get a mortgage. And that cuts straight to the heart of the American dream."
Morris responded in court to the charges saying, "I'm here today to take full responsibility for my actions. I know they've caused harm to the community. I'd like to apologize for my family for the embarrassment my actions have caused."
Morris is also facing charges for a similar scheme in California. He'll be sentenced next week following a plea agreement. His sentence will run alongside this conviction in West Virginia.
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A Raymond P. Morris of South Weber, Utah, was supposed to be sentenced Monday in federal court in Charleston. But a spokesman for U.S. Attorney Booth Goodwin says the hearing was postponed because the defendant's flight was canceled.
Morris faces up to 30 years for wire fraud and bank fraud.
Court records show Morris and another defendant were involved in a scheme with Deborah L. Joyce, who was sentenced to nearly four years for her role in the sale of property in a Hurricane subdivision at inflated prices.
Michael Hurd of Salt Lake City was sentenced to two years and three months for conspiracy to commit wire fraud and bank fraud.
Mark E. Greenlee, 50, of Charleston, previously pleaded guilty in September 2011. Greenlee admitted that he prepared a false and fraudulent appraisal in 2006 in furtherance of a multimillion dollar mortgage fraud scheme perpetrated by Deborah L. Joyce and others, in the Stonegate subdivision in Hurricane, Putnam County, W.Va.
Greenlee is the second real estate appraiser prosecuted as part of the Stonegate mortgage fraud investigation.
In November 2008, federal agents executed a search warrant on the homes of defendants Greenlee and Joyce. Greenlee refused to cooperate at that time.
The federal investigation continued and agents gathered sufficient information to approach former real estate appraiser, James Thornton, 48, in October 2009. When confronted, Thornton cooperated immediately which broke the investigation open against co-defendants Joyce, Greenlee and others.
It was not until an ongoing investigation conducted by federal agents that Greenlee entered into a plea agreement in June 2011. As a result of his unwillingness to cooperate initially with federal authorities, Greenlee did not receive any relief for substantial assistance at sentencing.
Greenlee admitted that in August 2006, he prepared a residential real estate appraisal for a property known as 62 Stoneridge valuing the property at $645,000, essentially twice the then-current market value. The defendant further admitted to purposefully concealing material information about some of the comparables he used to justify the inflated appraisal price.
To further the scheme, Greenlee admitted that he sent a copy of his appraisal, via email, across state lines to a mortgage broker in Utah, who ultimately provided the appraisal to a lender who funded a loan. In addition, Greenlee admitted that he subsequently altered his appraisal of the 62 Stoneridge property in light of an investigation conducted by the West Virginia Real Estate Appraiser and Licensing Certification Board of the appraisals he prepared for Joyce and others in the Stonegate subdivision.
In June, Thornton admitted that he also aided and abetted the wire fraud scheme perpetrated by Joyce and others by falsifying the appraisal price for a property known as 45 Spruce Ridge.
Specifically, Thornton admitted that, contrary to industry standards, he included a below-grade basement as “Gross Living Area” thereby allowing him to use comparables that were twice the square footage. He also admitted that he sent a copy of the false and fraudulent appraisal, via email, across state lines to the Utah mortgage broker.
Raymond Paul Morris, 51, of South Weber, Utah, was arrested Monday based on an 18-count indictment filed last week containing wire fraud, bank fraud and conspiracy charges.
According to the indictment, Morris was involved in a sophisticated, multimillion dollar mortgage fraud scheme along with co-conspirators Deborah L. Joyce, 38, of Hurricane, W.Va., and Michael Hurd, 37, of Utah.
A single-count Information was filed Wednesday against Hurd in the Southern District of West Virginia, charging him with conspiracy to commit wire fraud and bank fraud. A single-count Information also was filed Wednesday against Hurd in the Eastern District of California charging him with mail fraud linked to 20 properties in Modesto and Stanislaus Counties, California.
“These two prosecutions drive home the point that, although our area has not been as hard hit by the mortgage fraud crisis, the devastating financial tides can quickly wash up in our pleasant communities,” U.S. Attorney Booth Goodwin said. “Mortgage fraud has left many communities across this country devastated by foreclosures, plummeted home values and cost many citizens their jobs and savings. My office will remain committed to pursuing mortgage fraudsters to protect neighborhoods and communities across the Southern District of West Virginia.”
In total, Morris, Joyce, Hurd and others were able to close loans on six Stonegate properties as part of the fraud scheme by using a variety of methods.
Deborah L. Joyce was sentenced in April to 46 months in prison and five years of supervised release for her involvement in the Stonegate subdivision mortgage fraud scheme. Joyce’s husband, Todd Joyce, 38, of Hurricane, also was sentenced in April to 18 months in prison on mortgage fraud and tax evasion charges.
The Information filed in the Eastern District of California charges that Hurd used “The Gift Program” to fraudulently obtain over $14 million in loans causing a loss to lenders in California of $7.2 million. An Indictment against a second defendant allegedly involved in this scheme in California, Tony Havens, is currently pending before the Honorable Lawrence J. O’Neill.
Morris faces up to 540 years in prison and a $1 million fine.
Hurd faces up to 60 years in prison and a $2 million fine.
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