Feds charge six with alleged mortgage fraud

A federal grand jury has indicted six area people, including four mortgage brokers, for their alleged roles in a mortgage fraud scheme, and eight Springfield properties linked to the scheme were sold by David Poppenga - a Springfield home builder and concrete contractor who has denied any involvement.

Among those indicted Nov. 20 were former mortgage brokers Charles M. Davis, 34, of Rogersville; Cheryl Joan and Scott Allen Kassebaum, both 42, of Ozark; and Randall Lee Hall, 59, of Springfield.

Davis was owner of Master Marketing Consultants and former branch manager for Gateway Mortgage, which was housed in the Regions Bank building on South Glenstone Avenue. The Kassebaums owned Mid-America Homes LLC and Metro Consulting Group. And Hall was former branch manager for Choice Mortgage, which leased space in a strip mall on South Campbell Avenue.

In July 2007, the Missouri Division of Finance issued orders prohibiting Hall and the Kassebaums from operating as mortgage brokers in Missouri. Under Missouri law, the state finance commissioner may issue a prohibition order if a licensed mortgage broker has been convicted of certain crimes or an investigation reveals submitted documents to financial institutions that contain "multiple willful and material misstatements of facts."

"Once we were alerted, we were very aggressive in investigating it ... and (prohibition orders are) the biggest hammer we have," said Deputy Finance Commissioner Rich Weaver, who heads a statewide mortgage fraud task force.

Federal prosecutors have alleged that Davis, Hall and the Kassebaums falsified information on mortgage loan applications for 29 properties in Greene and Christian counties between November 2005 and February 2007. The former brokers did not disclose to out-of-state lenders that buyers would receive a significant portion of the purchase price - more than $100,000 in some cases - after closing, according to the 55-count indictment.

Also indicted were Steven Ray Spencer, 47, of Carl Junction, and Springfield resident Shanda Lynn Moore, a 44-year-old clerical aide at local office equipment dealer Office Concepts. Moore allegedly verified false income and employment information for Spencer and borrower Billy Hawkins - described as "Person B" in the indictment - on loan applications for 13 properties in Springfield and Nixa. Dee Wampler, Moore's Springfield attorney, declined to comment specifically on the indictment's allegations, but he said his client plans to enter an innocent plea when arraigned later this month.

FBI Supervisory Special Agent Dean Bryant said the investigation into local mortgage fraud schemes - led by FBI Special Agent Josh Nixon and IRS Special Agent Tim Arsenault - is continuing and that additional indictments are possible.

"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."

Builder denies involvement

Several fraudulent property transactions laid out in the indictment are directly linked to Poppenga, owner of bankrupt companies Poppenga Concrete Inc. and Elegant Homes and Design of the Ozarks LLC.

Through his companies, Poppenga sold eight Springfield properties - primarily in southeast Springfield subdivisions Olde Ivy and Eaglesgate - to homebuyers who received significant amounts of money outside of closing, court records show.

Springfield Business Journal first reported in February 2007 that Poppenga sold two of those properties - both on South Irish Ivy Avenue in Olde Ivy - for more than $530,000 each to buyer Bret L. Hignutt, who is described as "Person A" in the indictment, in early 2006.

The abnormally high sales prices, including one house in high-end Eaglesgate subdivision that Poppenga sold for $750,000, raised eyebrows in Springfield's real estate community. Kris Bossert, owner of Springfield-based B.A.I. Appraisal Service Inc., noted that the six-bedroom, three-bath house at 1483 E. Wilder Drive was listed for $549,900 before selling for $200,000 more in May 2006. After emerging from foreclosure, the property sold for just $350,000 in February, according to research Bossert prepared for SBJ.

Altogether, Poppenga sold three houses - the third on South Brightwater Trail in Rivercut - to Hignutt, who obtained loans totaling more than $1.45 million from three lenders.

According to the indictment, Gateway Mortgage broker Davis deposited loan proceeds totaling more than $403,000 from seller Poppenga into a Master Marketing Consultants account at Liberty Bank. Davis then routed 11 checks for almost $272,000 back to Hignutt, court records show.

What Hignutt did with the money, if anything, is unclear. Attempts to reach him for this story were unsuccessful, but Poppenga said he had no knowledge of the alleged scheme and did not know any of the buyers. Poppenga said Davis offered to recruit investors who would buy the high-end spec homes he was building in Olde Ivy and Eaglesgate.

"(Davis) asked for a bottom number, and I gave it to him. ... It wasn't long after that, he brought us real estate contracts," Poppenga said. "I was just building the damn houses for them, and they'd bring me a buyer."

Poppenga said he did not know who appraised the houses for lenders, but he said the sales prices were in line with housing values at the time.

"There's houses in (those subdivisions) that were comparable to ours that were selling at $178 a square foot," he said. "How do you say, if ours sold for $120 (per square foot), that's out of line? They were decked out (with) brick and granite and hardwood floors."

Poppenga said he was interviewed by the FBI and has cooperated with the ongoing mortgage fraud investigation.

In late April 2007, Poppenga Concrete Inc. filed a defamation suit against SBJ in Greene County Circuit Court after the publication refused to retract its earlier story. Judge Calvin Holden dismissed the suit without prejudice Nov. 4 for lack of prosecution.

Moving forward

Michael Pulscher, who co-developed Olde Ivy with Poppenga, said he's trying to get the southeast Springfield subdivision back on track after buying out his former partner in June.

Pulscher and Poppenga, who were equal partners, started developing the first phase of the 100-lot subdivision near Old Southern Hills and Living Memorial Park in 2002.

Pulscher said the subdivision was moving along as planned until 2005, when Poppenga started building houses for embattled Greenleaf Cos. LLC. Greenleaf - sister company to The Real Estate Co. - has not paid many of its investors for months, and lenders have foreclosed on homes in several Springfield area subdivisions developed by Poppenga in conjunction with Greenleaf.

Pulscher, who lives in Olde Ivy, said he observed suspicious property sales in the subdivision but denied any involvement.

"Some things didn't feel right - houses being priced and then taken off the market and sold for higher prices," he said.

Olde Ivy's emergence as a hot spot for alleged mortgage fraud hasn't reflected well on the subdivision, said Pulscher, who noted that property values seem to be stabilizing after a spate of foreclosures stemming from the fraudulent activity alleged by authorities.

Next year, Olde Ivy residents will have access to a $300,000 swimming pool and pool house now under construction, and Pulscher said he plans to relist 31 undeveloped lots for sale in early 2009.

"Olde Ivy is a nice place to live," he said. "It was a great project in the beginning; it's still a good project. ... I sure wasn't going to buy someone out of a sinking ship."

Appraiser Bossert said the manipulation of residential property values in subdivisions like Olde Ivy have had a lasting effect on the local housing market.

"(Some houses) are selling for pennies on the dollar," she said. "What may have sold last time for $600,000 is selling for $355,000 now. That's because what has happened has depressed the prices that much. All those foreclosures do affect the value of the properties in these subdivisions."