Six indicted for alleged mortgage fraud

Six area individuals were indicted Thursday by a federal grand jury in Springfield for their alleged roles in a mortgage fraud scheme involving 29 homes in Greene and Christian counties, according to the U.S. Attorney's Office.

Four of the six people indicted were former mortgage brokers operating in the Springfield area. Charles M. Davis, 34, of Rogersville, was the owner of Master Marketing Consultants and former branch manager for Gateway Mortgage, which was housed in the Regions Bank building on South Glenstone Avenue. Cheryl Joan and Scott Allen Kassebaum, both 42, of Ozark, owned Mid-America Homes LLC and Metro Consulting Group. Randall Lee Hall, 59, of Springfield was former branch manager for Choice Mortgage. In July 2007, the Missouri Division of Finance issued orders prohibiting the Kassebaums and Hall from operating as mortgage brokers in Missouri.

Also indicted Thursday were Springfield resident Shanda Lynn Moore, 44, who is office manager of local office equipment dealer Office Concepts, and Steven Ray Spencer, 47, of Carl Junction.

The indictments are the result of a three-year joint investigation by the FBI and Criminal Investigations division of the Internal Revenue Service that Springfield Business Journal began reporting on in February 2007. FBI Special Agent Josh Nixon - the guest at SBJ's 12 People You Need To Know breakfast Dec. 16 - and IRS Special Agent Tim Arsenault were the lead investigators.

FBI Supervisory Special Agent Dean Bryant said the investigation into local mortgage fraud schemes is continuing and that additional indictments are possible. Thursday's indictments were a long time coming, he added.

"When you're conducting an investigation of this nature, it's very detailed and the agents have to be careful in their analysis of everything that's occurred," Bryant said. "So it takes some time to come to the conclusions in order to prosecute and indict those responsible. Our hope was to have the initial wave of indictments before the end of the year."

Federal prosecutors have alleged that Davis, Spencer and Moore conspired to defraud home mortgage lenders from January 2006 through February 2007.

According to the U.S. Attorney's Office, the mortgage fraud scheme worked like this:

Davis and Spencer solicited "straw buyers" to purchase homes by promising them a significant portion of the purchase price after closing. Davis prepared loan applications on behalf of the buyers that contained material false statements, and then submitted those applications to out-of-state lenders. However, he did not disclose to lenders that buyers would receive a significant portion of the purchase price after closing. Moore allegedly verified the false income and employment information contained in the fraudulent loan applications.

The mortgage fraud scheme involved 13 houses, with home mortgage loans ranging from $200,000 to $500,000, according to the indictment, and the amount of loan proceeds returned to borrowers ranged from less than $30,000 to more than $100,000. Some of the home purchasers subsequently defaulted on the loans, and the homes have been foreclosed or are in the process of being foreclosed.

Prosecutors have charged Davis with 13 counts of wire fraud and Spencer with six counts of wire fraud related to the fraudulent transfer of loan proceeds. Davis also is charged with 13 counts of engaging in monetary transactions in criminally derived property and Spencer with six counts of engaging in monetary transactions in criminally derived property related to money routed back to borrowers in the scheme.

Davis and the Kassebaums also were allegedly involved in a similar mortgage fraud conspiracy from March-July 2006.

The scheme involved seven houses with mortgage loans ranging from $200,000 to more than $400,000. The amount of loan proceeds returned to the borrowers ranged from less than $30,000 to nearly $100,000. Borrowers in this case also defaulted on loans, triggering foreclosure.

Davis and Cheryl Kassebaum are each charged with seven counts of wire fraud, and Scott Kassebaum is charged with two counts of wire fraud. Davis and Cheryl Kassebaum are also charged with seven counts of engaging in monetary transactions in criminally derived property, and Scott Kassebaum is facing two counts of engaging in monetary transactions in criminally derived property related to proceeds routed to borrowers.

Prosecutors also have alleged that Hall and Spencer were involved in a similar mortgage fraud conspiracy from November 2005 to October 2006.

This scheme involved nine houses with mortgage loans ranging from less than $300,000 to more than $750,000. The amount of loan proceeds returned to the borrowers ranged from $15,000 to more than $141,000.

Hall and Spencer are each charged with nine counts of wire fraud and three counts of engaging in monetary transactions in criminally derived property related to the transfers of funds back to borrowers.

See SBJ's Dec. 1 issue for more about the local mortgage fraud scheme and related indictments.

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