PRESS NOTICE WILLIAM N. NETTLES UNITED STATES ATTORNEY DISTRICT OF SOUTH CAROLINA. Columbia Man Sentenced to Eight Years for Mortgage Fraud

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1 PRESS NOTICE WILLIAM N. NETTLES UNITED STATES ATTORNEY DISTRICT OF SOUTH CAROLINA Columbia Man Sentenced to Eight Years for Mortgage Fraud United States v. Randall Antoine, Criminal No. 09-cr AUSA Nathan Williams, Secret Service Agent Trae McAbee Over the course of six months in 2008, Randall Antoine manipulated personal information of over 500 individuals, generated over 500 fraudulent loan applications, obtained approximately $4.75 million dollars from six different lending companies and spent over $250, on a lavish lifestyle. In March, 2010, he was sentenced to eight years in prison for his efforts. Antoine s scheme involved his posing as a mortgage originator, or mortgage broker. In this guise, Antoine would apply for down payment assistance (DPA) funds. These funds are issued by companies to home buyers who need help with making a down payment on a home. Antoine would go on-line and obtain information about actual home purchases that had recently occurred. He would then use that information to complete a fraudulent application for funds and file it with a DPA company. Antoine provided false HUD closing documents and personal information about the purported individual, and he posed as several different mortgage brokers, so as not to raise the suspicions of the DPA companies. Then, in Ponzi-scheme fashion, Antoine used money obtained from later applications to pay off earlier loans. This scheme lasted for approximately six months. In that time, Antoine borrowed around $4.75 million dollars. When the scheme collapsed, Antoine still owed $558, to the DPA companies. After his scheme collapsed, but before arrest, Antoine got a job in a bank under a false identity. At the time of his arrest, investigators discovered that Antoine had obtained and used several credit cards in the name of a recently deceased individual and three credit cards in the name of another individual. Antoine also had in his possession several mortgage applications from bank customers that he had taken from the bank and intended to use for further fraudulent activity. At the time of his arrest, Antoine had a long history of fraudulent activity, including fourteen separate convictions for financial crimes. Antoine pled guilty to wire fraud and illegal use of a social security number. As a result, in March 2010, he was sentenced to eight years in prison. Although a car Antoine purchased with the proceeds of his scheme was forfeited, the money Antoine had stolen through his scheme was not recovered. Records indicate that Antoine spent the proceeds of his fraud on a lavish lifestyle, full of trips and vacations, as quickly as he stole it. USA v. Grant et al, Criminal No. 6: AUSA William J Watkins, United States Secret Service Upstate Residents Enter Guilty Plea to Bank Fraud

2 Anthony Grant, age 43, of Simpsonville, Antonio Grant, age 43 of Simpsonville, Michael Holmes, age 37, of Lawrenceville, Georgia, Nathan Seppala, age 50, of Greer, Sandra Kinnunnen, age 59, of Greer, and Tower Homes, Inc., a South Carolina corporation, all pled guilty March 17, 2010 in federal court in Spartanburg, South Carolina, to conspiracy to commit bank fraud in violation of 18 U.S.C Anthony Grant, Antonio Grant and Michael Holmes operated, managed, and controlled South East Real Estate Solutions ( SERES ). As a part of their scheme, the defendants sought out unsophisticated victims interested in real estate investment and would then locate property for these investors to purchase. Many of these novice investors were recruited from the congregation of Redemption World Outreach Church of Greenville, South Carolina. The Grants and Holmes promised the investors that once the property was purchased, SERES would make all mortgage payments, would find individuals to rent the property, would manage the property, and that SERES would try to flip the property to earn a profit for themselves and the investors. The investors would provide personal financial information to the Grants and Holmes so that financing could be sought for the real estate purchases. The Grants and Holmes would use this information to fill out loan applications that were submitted to financial institutions. In filling out the applications, the Grants and Holmes would often falsify the investor financial information provided to the financial institutions. For example, the defendants reported that investors had a 401k account when the investors had no such account and had never informed the Grants and Holmes that such an account existed. At the closings of the property, the Grants and Holmes would provide the investor with a check to present to the closing attorney as the investor s own funds. It was not disclosed to the bank that this check came from a source independent of the investor. As a result of the false information, the banks loaned funds far in excess of what would have been loaned had accurate information been presented. Many of these loans are now delinquent and many of the homes are in foreclosure. Many of the properties the Grants and Holmes arranged for the investors to purchase were sold by Tower Homes, Inc. The President of Tower Homes is Nathan Seppala and the Vice President is Sandra Kinnunnen. The Grants would enter into contracts with Tower Homes, whereby the Grant and Holmes arranged for an investor to purchase a Tower Homes property far in excess of what Tower Homes would have sold the property to a typical buyer. For arranging for the investor to purchase the Tower Homes property, Tower Homes would pay the Grants and Holmes kickbacks that were not disclosed to the bank. Representatives of Tower Homes would represent to the bank in sworn affidavits that there were no oral or written contracts relating to or affecting the property purchased by the investor, when, in fact, the representatives knew about the contracts with the Grants and Holmes and the kickbacks paid to the Grants and Holmes. The maximum penalty the Defendants can receive is a fine of $1,000,000 and/or imprisonment for 30 years, plus a special assessment of $100. USA v. Samuel Cowles, Criminal No. 0: Man Charged With Rock Hill Area Mortgage Fraud AUSA Winston D. Holliday Jr., United States Secret Service, IRS, HUD OIG Samuel Caleb Cowles, age 26, of Pineville, North Carolina, was arraigned on a two-count Indictment June 15, 2010, charging him with Conspiracy to Commit Mortgage Fraud in violation of 18 U.S.C. 1349, and Conspiracy to Commit Money Laundering in violation of 18 U.S.C. 1956(h).

3 According to the Indictment, Cowles worked as a mortgage broker and owned Prosperity Mortgage. Cowles is accused of affecting loan decisions by inflating incomes, omitting liabilities on loan applications, and making payments outside closing. The Indictment charges that Cowles falsified approximately twenty loan applications, most of which concerned properties in the Rock Hill and Charlotte areas. William N. Nettles stated the maximum penalty Cowles could receive is a fine of $250,000 and/or imprisonment of 20 years. Mr. Nettles also stated that the charges are merely accusations and that the defendant charged is presumed innocent until and unless proven guilty. Chapin Man Pleads to Inflating Real Estate Appraisals in Myrtle Beach United States v. Kenneth Paul Holmes, Criminal No AUSA Bill Day; FBI Agent Rondi Peiscop-Grau Kenneth Holmes of Chapin, South Carolina, entered a guilty plea on April 28, 2010, to a one count Information charging him with conspiracy to commit bank fraud by defrauding financial institutions Royal Bank of Canada (RBC), J. P. Morgan Chase Bank, Plantation Federal Bank, and Sun Trust Bank. Holmes was a real estate developer and the sole owner of Stonegate Properties Inc., a company Holmes started to buy and sell residential properties in the Myrtle Beach area. Holmes arranged for the sale of seven of Holmes properties which were in and around Surfside Beach, Garden City, and Murrell s Inlet, South Carolina, to investors or straw purchasers brought in by mortgage brokers. Holmes and the mortgage brokers agreed on an actual sales price for the property. Holmes and his coconspirators then submitted inflated real estate appraisals, false and misleading mortgage loan applications with fake documentation, and false HUD-1 settlement statements making it appear the property was worth and being sold for more than it actually was. This caused the bank to make loans totaling $5,865,000 which allowed Holmes and his co-conspirators to share in approximately $1,680,000 in profit. This investigation continues. Myrtle Beach Foursome Facing Bank Fraud Charges United States v. Jeffrey Todd Shoup, Thomas Darin Epps, Tiffany L. Travis, and David Thomas Hix, Jr., Criminal No AUSA Bill Day, FBI Agent Rondi Peiscop-Grau Jeffrey Todd Shoup, Thomas Darin Epps, Tiffany L. Travis and David Thomas Hix were indicted on April 27, 2010, for bank fraud. Thomas Darin Epps has entered a guilty plea to bank fraud. The indictment charges that Shoup and Hix were involved in various real estate businesses in the Myrtle Beach area using various names including T&J Development Company, T&J Development of North Myrtle Beach, LLC., and Ocean Companies, Inc., dba Ocean Front Real Estate Company. According to the allegations, Thomas Darin Epps owned and operated Dunes Mortgage, a mortgage brokerage and banking services company in the Myrtle Beach area. Tiffany L. Travis was employed by Jeffery Todd Shoup to work on a part time basis at T&J Development and Ocean Front Real Estate Company, primarily answering the phones. From May 2007 to August 2007, the indictment charges that Shoup, Epps, and Travis entered a scheme to sell three condominium units owned by Shoup as a result of one of his real estate developments. Epps was involved with the scheme because he had invested in the development and wanted to recover his investment. The indictment charges that Travis signed blank loan documents so that Shoup and Epps could file loan applications falsely claiming that Travis was earning more than $20,000 per month and that each of the loans was for property that Travis was going to use as a primary residence. As a result of submitting the false loan applications, loans of over $2,200,000 were obtained.

4 The indictment further charges that Shoup and Hix conspired to commit bank fraud while they were involved in various real estate development businesses in the Myrtle Beach area, including projects such as Bahama Island, Ship-A-Hoy Marina, LLC., Crystal Palace, LLC., Cherry Grove Villas II, LLC., Pier Watch Villas, LLC., and Green Turtle, LLC. The indictment alleges that from April 2004 until January 2009, Shoup and Hix obtained preconstruction deposits from investors and purchasers with Bahama Island and Crystal Palace, falsely promising that the deposits would be held in escrow and only used to develop the projects. As a part of the conspiracy, Shoup and Hix are alleged to have submitted false statements to obtain loans from investors to develop property in the British Virgin Islands. They are alleged to have received deposits and loans in excess of $8,300,000, causing losses of more than $7,000,000. The investigation is ongoing. US Attorney William N. Nettles stated that the charges are merely accusations and that the defendants charged are presumed innocent until and unless proven guilty. United States v. Gary Albert Hager, Criminal No AUSA Bill Day, FBI Agent Rondi Peiscop-Grau Myrtle Beach Man Charged With Bank Fraud On April 30, 2010, the US Attorney s office filed an Information charging Gary Albert Hager with conspiracy to commit bank fraud, along with a Plea Agreement wherein Hager admits the same. The Information charges and Hager has admitted to conspiring with others from June 1, 2008, through October 20, 2008, to defraud J.P. Morgan Chase Bank, N.A., and Plantation Federal Bank, in the Myrtle Beach area. Hager was employed as a loan officer for J. P. Morgan Chase Bank at the time. As part of the conspiracy, Hager s co-conspirators arranged for the sale of four separate properties in the Myrtle Beach area with the understanding that the properties would be given a higher value than their actual value in order to obtain large loans. Loan applications were made to the banks which included inflated real estate appraisals, false mortgage loan applications, fake documentation, and false HUD-1 settlement statements. Hager assisted by working to insure that the loans would be approved. As a result, loans in excess of $3,300,000 were paid and Hager was given kickbacks of approximately $25,000. Hager is scheduled to plead in July United States v. Jill Diane Brennan, Criminal No AUSA Bill Day; FBI Agent Rondi Peiscop-Grau Myrtle Beach Woman Faces Charges on Bank Fraud On April 26, 2010, the United States Attorney s office filed an Information charging Jill Diane Brennan with conspiracy to commit bank fraud, along with a Plea Agreement wherein Brennan admits the same. The Information charges and Brennan has admitted to conspiring with others from February 1, 2008, through April 30, 2008, to defraud Royal Bank of Canada (RBC) when obtaining loans. Brennan was employed by Bank of America in Myrtle Beach at the time. In order to obtain loans from RBC, Brennan and her co-conspirators caused fraudulent verifications of deposits to be filed with loan applications to RBC. The verifications of deposits falsely indicated that borrowers had certain deposits at Bank of America. RBC relied on the verification of deposits when issuing three loans totaling $1,446,000. Brennan is scheduled to plead in July The investigation is ongoing. Kershaw County Woman Sentenced for Misleading Mortgage Lenders

5 United States vs. Christie McGougan, Criminal No. No. 3: AUSA Winston D. Holliday Jr., FBI Agent Ron Grosse, Secret Service Agent Chris McClure, HUD OIG Christie J. McGougan, age 41, of Bethune, was sentenced to one year and one day in jail on May 25, 2010 in federal court in Columbia for participating in a Conspiracy to Falsify Loan Applications in violation of 18 U.S.C United States District Judge Cameron McGowan Currie imposed the sentence. From 2004 through 2006, McGougan and her business partner sold modular and existing homes, primarily in the Lugoff-Camden area, under the business name Magnolia Bay Homes. Magnolia Bay Homes marketed the properties to buyers, telling them that they did not have to make down payments to purchase the properties. However, banks required down payments from the buyers to approve mortgage financing and relied on closing statements prepared for each transaction to determine if the buyer was making a down payment. To deceive the banks to make the mortgage loans, McGougan used business funds to purchase cashier's checks in the names of the buyers, giving the appearance to the banks that the buyers were making the down payments. The deceptive closing statements were relied upon by the bank in approving the mortgage loans. Many of the houses in this case ended up in foreclosure, and most of the buyers ultimately declared bankruptcy. The overall loss from all the transactions is approximately $750,000. USA v. Kimberly McAbee, Case No. 7: AUSA William J. Watkins, FBI, Woodruff Police Dept. Woodruff Woman Enters Guilty Plea to Embezzlement by Manipulating Home Equity Lines Kimberly O. McAbee, age 44, of Woodruff, South Carolina, pled guilty April 27, 2010 in federal court in Anderson, to embezzlement of bank funds in violation of 18 U.S.C From 1988 until December 2009, McAbee worked at Arthur State Bank in Woodruff, South Carolina. Starting in about November 2006 and continuing into December 2009, McAbee embezzled approximately $520,000 through the manipulation of home equity lines of credit and mortgage loans held by family members and friends at Arthur State Bank. In an effort to hide her activities, McAbee accessed the bank s expense and Freddie Mac accounts to move funds around to conceal the theft. McAbee s activities were discovered on December 24, 2009, by her supervisor and reported to law enforcement. The maximum penalty McAbee can receive is a fine of $1,000, and/or imprisonment for 30 years, plus a special assessment of $ ####