Chico Business Partners Sentenced for Mortgage/Real Estate Fraud Scheme

(Source: FBI) - SACRAMENTO, CA—Two Chico business partners were sentenced today to prison for a mortgage fraud scheme they operated in 2006-2007, United States Attorney Benjamin B. Wagner announced.

Garret Griffith Gililland, III, 31, formerly of Chico and Paradise, was sentenced today by United States District Judge Edward J. Garcia to seven years and 10 months in prison and a three-year term of supervised release. Judge Garcia also sentenced Gililland’s business partner, Shane Burreson, 39, of Orland, to 23 months in prison and a three-year term of supervised release. Both defendants pleaded guilty to mail fraud and money laundering before Judge Garcia last year stemming from their involvement in Nor-Cal Innovative Investments in Chico.

According to court documents, Gililland orchestrated a scheme that falsified the sales prices of approximately 46 homes he brokered in Chico subdivisions between 2006 and 2008. After the close of escrow, homebuilders would write kickback checks of $40,000 to $60,000 per home to various front-companies Gililland and Burreson controlled. Gililland, Burreson, and others would then use this money to pay buyers $20,000 to $30,000 for purchasing the homes. None of the kickbacks were disclosed to the mortgage lenders who financed the properties. Additionally, Gililland and Burreson arranged for straw buyers and investors fraudulently to obtain mortgages for the homes, falsifying income and employment histories.

“The fraud scheme in this case was audacious in scope, and those involved in the scheme are paying a steep price for their criminal conduct,” said U.S. Attorney Wagner. “Mortgage fraud remains a top priority of this office, and we are continuing to vigorously investigate and pursue such cases.”

In sentencing Gililland, Judge Garcia said that he had weighed Gilliland’s substantial assistance to the government in its prosecution of other mortgage fraud defendants against the scope of his fraud, his flight to Spain, and extradition battle he fought, as well as other factors. In sentencing Burreson, Judge Garcia stated that he credited Burreson’s early withdrawal from the scheme, his cooperation with the government and his contributions to the community.

This case is the product of an investigation by the Federal Bureau of Investigation, Internal Revenue Service-Criminal Investigation, and the Butte County District Attorney’s Office. Assistant United State Attorney Russell L. Carlberg prosecuted the case.

Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions, and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.