(Source: Dianna Hunt Fort Worth Star-Telegram, Texas (MCT) — An Arlington development company was convicted Monday and paid $50,000 in fines for participating in a complex $13 million mortgage fraud that operated throughout North Texas.
In a rare criminal case against a corporation, Sierra Developers pleaded no contest to helping generate nearly $600,000 in fraudulent loans for the sale of two homes worth far less in Mansfield’s Twin Creeks subdivision in 2004.
The loans were handled through companies operated by mortgage broker Chekeelah Phelps, 47, who has pleaded guilty to engaging in organized criminal activity and money laundering.
Phelps is awaiting sentencing. Sixteen other people have been convicted for their roles in the scheme, including a title company closer, a Realtor, another home builder, another mortgage broker and eight “straw buyers” who lent their names to buy homes they couldn’t afford through the subprime lending system.
In all, $180,000 in fines have been levied against participants, including the fine already paid by Sierra, records show.
“It was just blatant,” said prosecutor David Lobingier of the economic crimes division of the Tarrant County district attorney’s office. “It was like a daytime armed robbery.”
Lobingier said Sierra Developers falsified records to inflate the value of the homes by $126,000, then used those funds to pay kickbacks to Phelps, who paid the other participants in the scheme. The homes, which had been on the market a good while, ended up as foreclosures.
Attorney Jeff Kearney, who represents Sierra, said the plea deal with prosecutors ends the companies’ involvement.
“This matter is now completely over,” he said. “The corporation made a decision which brings this to an end. From a financial standpoint, it was the smartest thing to do.”
Charges were initially filed against Sierra and its sister company, home builder Genesis Homes of Texas. The companies were run by former Arlington Chamber of Commerce Chairman Jerry Jordan, a prominent commercial real estate developer and onetime insurance agent who died in 2010.
His son, Jeff Jordan, is listed as president of Sierra Developers, but Kearney said the companies are winding up their business.
“Jerry Jordan had a wonderful reputation as a respected businessman,” Kearney said. “I don’t know the answer to what happened.”
The scheme was uncovered after the district attorney’s office received an anonymous letter asking it to investigate why so many Twin Creeks homes were foreclosed, vacant or for sale. Lobingier said investigators do not know who sent the letter.
Former FBI supervisor Brad Wheeler was brought in to investigate as a consultant to the district attorney’s office.
Wheeler said the scheme worked because there were “dirty appraisers, dirty borrowers, dirty closers, dirty developers.”
“If the [deal] doesn’t close, then nobody makes money,” Wheeler said.
In one case, a hairdresser bought two homes for $500,000 each on the same day, and no one questioned the purchases.
In other cases, phony mechanics liens were filed against the homes to cover up the kickbacks that were paid, Wheeler said.
The investigation is ongoing, and more indictments are expected.
Dianna Hunt, 817-390-7084
Twitter: @DiannaHunt
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Source: Dianna Hunt Fort Worth Star-Telegram, Texas (MCT)
