White Collar Crime News

Government brings Mortgage Fraud Charges Against Six People Involving Million-Dollar-Plus Houses January 31, 2010

A two-year investigation by the Greater Cincinnati Mortgage Fraud Task Force has resulted in a seven-count indictment charging two Cincinnati area home builders, a former Huntington National Bank vice president, and a self-employed tax preparer and interior designer with participating in a mortgage fraud scheme to sell four high-end luxury properties to “straw buyers.” A straw buyer is someone who is listed as the owner of a house, but is not really the one buying the house.

Charged were:

Eric D. Duke  of Newport, Kentucky. Duke is a self-employed tax preparer and interior designer. He also owned a property management company called Rivendale Property Management Group, L.P., in Maineville, Ohio.

Terrence J. Monahan Jr., of Cincinnati, formerly with Huntington National Bank.

Bernard J. Kurlemann, of Mason, owner of Kurlemann Homes of Long Cove and Long Cove Management, LLC.

Bryan Sanneman, of Mason, owner of Sanneman Homes, Inc.

The charges stem from the sale of four residential properties in 2006 to 2007, three of which were sold for approximately $2 million each. The Government alleges that Monahan, Sanneman, and Kurlemann, each conspired with Duke to defraud lenders involved with the sales. 

The scheme involved Duke locating two people willing to buy the properties in name only and let their names be used on loan applications. Duke worked with a mortgage broker who submitted fraudulent loan applications that contained false income and assets. Monahan gave Duke a customer bank account statement to be used as a “go-by” to create fictitious account statements to support fraudulent assets on the loan applications. 

Sanneman and Kurlemann provided documentation to the lenders falsely stating that they had received down payments from the borrowers when they had not. The defendants conspired with Duke to have the fraudulent loans approved in order to sell their properties. 

The defendants benefitted from the scheme because they were able to sell their expensive properties, get out from under substantial mortgages, and receive additional loan proceeds.  All four defendants are charged with conspiracy. Duke and Monahan are charged with conspiracy to commit wire fraud and wire fraud.  Duke and Kurlemann are charged with conspiracy to commit loan fraud and two counts of loan fraud.

Loan proceeds from the alleged fraud totaled approximately $6.7 million.

Charges have been filed separately against the straw buyers. Francisca Webster,  of Cincinnati, has been charged in a separate information, with conspiracy to commit wire fraud. Christopher Gagnon, of Florence, Kentucky has been charged with loan fraud.

Clearly, the straw buyers have the best chance of working out a great deal in exchange for testimony.