Feb. 4, 2008 - United States Attorney Mary Beth Buchanan and key officials from federal, state and local law enforcement and regulatory agencies announced today the launch of the Western Pennsylvania Mortgage Fraud Task Force, a strategic partnership intended to combat the growing problem of mortgage fraud in the Greater Pittsburgh region.

The Mortgage Fraud Task Force brings together representatives from the U.S. Attorney's Office, Federal Bureau of Investigation, Internal Revenue Service - Criminal Investigation, U.S. Postal Inspection Service, U.S. Secret Service, U.S. Department of Housing and Urban Development - Office of Inspector General, Pennsylvania Attorney General's Office, Pennsylvania Department of Banking, Pennsylvania Department of State, Bureau of Enforcement and Investigation and the Allegheny County Sheriff's Office to investigate and prosecute mortgage fraud offenders.

"Owning a home has long been part of the American dream," said U.S. Attorney Buchanan.  "Through the Western Pennsylvania Mortgage Fraud Task Force, we are aggressively pursuing anyone who illegally stands in the way of this dream."

U.S. Attorney Buchanan also announced the establishment of a mortgage fraud hotline for industry members to call to report potential fraud. The number is 412-894-7550. Once potential abuses have been reported, the Task Force will work with other appropriate law enforcement and prosecutorial entities to evaluate and investigate the claims. Consumers may report suspected fraud by calling the Pennsylvania Attorney General's Consumer Protection Hotline at 1-800-441-2555 or by downloading a complaint form from www.attorneygeneral.gov.

Mortgage fraud is generally described as a scheme involving the submission of false information to lenders and others in order to obtain mortgage loans that would not otherwise have been approved. Such schemes often include the submission of false information to lenders and others in order to obtain loans at higher values and lower rates than would be available through legitimate means. A typical mortgage fraud scheme employs various professionals such as recruiters, attorneys, appraisers, mortgage brokers, and builders. For example, a victim is recruited. A set of falsified loan application documents, including an inflated appraisal, is prepared and submitted to a victim lender resulting in the issuance of an over-valued loan. Ultimately the property is foreclosed upon due to the inability of the victim buyer to maintain the payments. The lender loses the difference between the foreclosure sale proceeds and the loan balance. The buyer loses any down payment and is left with a credit history that precludes being approved for a mortgage in the future. The conspirators pocket the difference between the overvalued loan and their costs in obtaining the property. Other victims include property owners in the area who see property values plummet as a result of foreclosure sales or vacant foreclosed properties.

Jim Gehr, Special Agent in Charge of the U.S. Secret Service's Pittsburgh Field Office noted, "The U.S. Secret Service is very serious about its commitment to protect Pittsburgh and other Western Pennsylvania communities from high impact financial crimes, such as mortgage fraud.  We proudly stand side by side with our local, state and federal law enforcement partners in conducting these investigations."

"The U. S. Postal Inspection Service is committed to protecting postal customers from misuse of the mails," said Robin Dalgleish, Inspector in Charge, United States Postal Inspection Service, Pittsburgh Division.  "We are pleased to be participating in the Mortgage Fraud Task Force in order to protect consumers from unscrupulous mortgage brokers, appraisers and others who conspire in these crimes that cause consumers to lose their homes and even their dreams of home ownership.  We look forward to working with other task force members and anticipate the positive results from our collaborative effort to protect the public and businesses of Western Pennsylvania."

"Mortgage fraud crimes create a loss of tax revenue, burden lenders with bad loans and neighborhoods with abandoned and deteriorating properties,"  said Charles A. Jenkins, Special Agent in Charge IRS-Criminal Investigation, Pittsburgh Field Office.  "IRS stands ready to partner with all law enforcement agencies to pursue individuals who commit these types of crimes that can negatively impact our community and economy."

Joseph Clarke, Special Agent-in-Charge, U.S. Department of HUD, Office of Inspector General, Mid-Atlantic Region added, "This Task Force will bring investigative resources together in an effort to further the Federal Government's commitment to investigate fraud schemes developed to victimize unwitting home buyers and financial institutions that are in the business of helping individuals achieve the dream of home ownership.  Through this Task Force, the HUD Office of Inspector General will further its efforts to improve the integrity of HUD/FHA Single-Family Insurance Programs."

Robert Rudge, Assistant Special Agent in Charge of the FBI's Pittsburgh Office, stated, "Investigation of mortgage fraud is one of the most important criminal priorities of the FBI and a growing problem throughout the United States.  The formation of the Western Pennsylvania Mortgage Fraud Task Force is an important step in ensuring that this problem is effectively addressed in Western Pennsylvania."

"For many people, our homes are our most valuable possessions, which makes them prime targets for scam artists seeking to take advantage of unsuspecting consumers," Pennsylvania Attorney General Tom Corbett said. "The Attorney General's Bureau of Consumer Protection will work vigorously to protect the rights of all of the consumers caught up in real estate and mortgage schemes."

"A Banking Department study of mortgage lending in Pennsylvania clearly showed that lenders, brokers, servicers, appraisers, developers, contractors, builders and others are all key players in today's complicated mortgage transactions," said Steve Kaplan, Secretary of Banking. "While the vast majority are honorable, this task force combines the concentration, expertise and authority we need to find and prosecute those who are not.  The Banking Department is proud to be a part of this stepped-up enforcement effort even as we continue our work in Harrisburg to change Pennsylvania's laws to better protect homebuyers.

Secretary of the Commonwealth Pedro A. Cortés stated, "Mortgage fraud affects some of our most vulnerable families and is a practice that must be stopped.  The Department of State is eager to work with this interagency task force, which will combine all of the agencies' collective strengths to investigate and prosecute mortgage fraud offenders."

Allegheny County Sheriff William P. Mullen said, "Executing sales on foreclosed properties is not a pleasant or easy task, but it is an obligation the Sheriff's Office is bound to fulfill.  The Sheriff's Office is glad to play its role in a partnership committed to unmasking and preventing the crooked real estate deals contributing to our region's mortgage foreclosures.  We are hopeful this initiative will bring a deliberate decline to Sheriff's Sales and look forward to working with the U.S. Attorney's Office and participating agencies to thwart the illicit practices of mortgage fraud."

As part of the stepped up investigation into and prosecution of mortgage fraud cases, U.S. Attorney Buchanan announced the charges filed within the past week against 24 individuals, and pointed to other successful prosecutions occurring in 2007.  Case summaries follow.

I.  RECENT INDICTMENTS
Pope Financial Services and Sprouts Mortgage; Michael Pope, et al.
Michael McFerron Pope, 43 -- Conspiracy, Money Laundering
James Andrew Spike, 43 -- Conspiracy
Marlin Sprouts, Jr., 52 -- Conspiracy

The grand jury returned separate but related indictments charging Michael Pope, Marlin Spouts, Jr., and James Spike with participating in a Mortgage Fraud Conspiracy.  Pope was also charged with two counts of Money Laundering.

All three indictment are related to similar charges filed against Tiffany Sprouts.  Sprouts previously pleaded guilty to the information and is awaiting sentencing.  Pope and Tiffany Sprouts operated Pope Financial Services and Sprouts Mortgage out of an office building located on Lewis Run Road in the Pleasant Hills area.
The indictments allege that Pope, Spike, and Marlin and Tiffany Spouts participated in a mortgage fraud and property flipping scheme.  Pope and Tiffany Sprouts, through Sprouts Mortgage and Pope Financial Services, recruited at least six different straw buyers with favorable credit scores to separately apply for mortgage loans from various financial and mortgage lending institutions to obtain funds and to purchase residential real estate selected by Pope and Tiffany Sprouts.  Pope and Tiffany Sprouts created and obtained false and fraudulent documents in connection with the mortgage loans, including the following:

(a)    applications;
(b)    financial statements;
(c)    verifications of deposit;
(d)    verifications of rent or mortgage;
(e)    verifications of employment;
(f)    property leases; and
(g)    wage statements.

Pope and Sprouts created and obtained the false and fraudulent documents to inflate the straw buyers' employment and financial condition, to overstate income and assets, in order to increase the dollar amount that could be borrowed against the properties.  They also used appraisals with an inflated opinion of market value of the properties in order to increase the dollar amount that could be borrowed against the properties.

In addition, Pope and Tiffany Sprouts temporarily deposited funds into bank accounts of the straw buyers to make it appear that the straw buyers had sufficient assets to qualify for the loans and to make the down payments.  They also created false lease agreements purporting to show that the straw buyers would be renting to others the properties the straw buyers owned to conceal the true domicile of the straw buyers and to make it appear that the straw buyers had a source of income.
The indictment alleges that Pope and Tiffany Sprouts repeatedly engaged in this conduct over a four and a half year period from June 2002 to December 2006, involving millions of dollars of loans.  The properties involved were located, among other places, in Peters Township and Upper Saint Clair.

James Spike and Marlin Sprouts, Jr., according to their indictments, participated in the conspiracy by agreeing to act as the buyer and borrower, knowing that the loan applications submitted on their behalf contained fraudulent information.

Precision Mortgage; Kelly Fields, et al.
Anthony Fields, 38 -- Wire Fraud Conspiracy
Alice Fields, 28 -- Wire Fraud Conspiracy
Lisa Fields, 33 -- Wire Fraud Conspiracy
Raymond Fields, 26 -- Wire Fraud Conspiracy
Randy Carretta, 44 -- Wire Fraud Conspiracy
Jason Jester, 38 -- Wire Fraud Conspiracy
Aaron McCarthy, 43 -- Wire Fraud Conspiracy
Andrea Revak, 47 -- Wire Fraud Conspiracy
Joyce Davern, 66 -- Wire Fraud Conspiracy
Kelly Fields, 35 -- Wire Fraud Conspiracy
Sabrina Stetter, 46 -- Wire Fraud Conspiracy
Wayne Fumea, 61 -- Conspiracy

The grand jury returned separate but related indictments charging Kelly Fields, Joyce Davern, Sabrina Stetter, Alice Fields, Anthony Fields, Lisa Fields, Andrea Revak, Aaron McMarthy, Wayne Fumea, Jason Jester, and Randy Carretta with participating in a Mortgage Fraud Conspiracy.  In addition, the United States Attorney filed a related information charging Raymond Fields with participating in the same Mortgage Fraud Conspiracy.

The indictments allege that Jason Jester and Randy Carretta operated Precision Mortgage, a Carnegie mortgage broker business that assisted borrowers in obtaining financing to purchase homes.  The Indictment alleges that Jester and Carretta submitted loan applications and associated documents knowing that the loan applications contained fraudulent representations about the financial condition of the borrowers and that the documents were fraudulent.  The fraudulent documents included, among others, verifications of employment, verifications of deposit, appraisals, pay stubs, and W-2s.

Kelly Fields and Joyce Davern worked as loan originators recruiting individuals to purchase properties in the mortgage fraud scheme.  According to the indictment, they submitted to the lenders loan applications that they knew contained misrepresentations and documents that they knew were fraudulent.  Sabrina Stetter, according to the indictment, assisted the conspiracy by preparing fraudulent document like pay stubs and W-2s.  Alice Fields participated in the conspiracy by assisting in the processing of the fraudulent loans.

Anthony Fields assisted in the conspiracy in several ways.  First, he acted as a borrower and buyer for five properties knowing that the loan applications contained misrepresentations about his financial condition and that fraudulent documents were submitted in support of the applications.  He also, according to the indictment, verified the employment of borrowers who had falsely represented that they were employed by an entity associated with Anthony Fields.  Anthony Fields also participated in the conspiracy by agreeing to be paid a portion of the loan proceeds for construction work performed or to be performed on the collateral underlying the loan, when in fact there had been no construction work performed and there was no expectation of construction work to be performed.  Another defendant, Aaron McCarthy, also participated in the conspiracy by agreeing to be paid a portion of the loan proceeds for construction work performed or to be performed on the collateral underlying the loan, when in fact there had been no construction work performed and there was no expectation of construction work to be performed.
Lisa Fields, Raymond Fields, and Wayne Fumea were conspirators in the scheme that acted as buyers and borrowers of properties knowing that the loan applications contained misrepresentations and many of the supporting documents submitted to the lending institutions were fraudulent.

People's Home Mortgage: Leon Truskowski
Sharon Chamberlain, 39 -- Wire Fraud Conspiracy
Colleen Chiavetta, 35 -- Wire Fraud Conspiracy, Money Laundering Conspiracy
John Chiavetta, 68 -- Wire Fraud Conspiracy
Erika Stanford, 34 -- Wire Fraud Conspiracy, Money Laundering Conspiracy
Aaron Thompson, 32 -- Wire Fraud Conspiracy
Leon Truskowski, 37 -- Wire Fraud Conspiracy, Money Laundering Conspiracy
The grand jury returned separate but related indictments charging Leon Truskowski, Colleen Chiavetta, Daniel Gillen, Erika Stanford, Sharon Chamberlain, Aaron Thompson, and John Chiavetta with participating in a Mortgage Fraud Conspiracy.
Leon Truskowski and Colleen Chiavetta operated a mortgage broker business, located in Pittsburgh's West End, called People's Home Mortgage that assisted borrowers in obtaining financing to purchase homes.  According to the indictments, Truskowski, Colleen Chiavetta, Erika Stanford and Daniel Gillen, who were employed by People's Home Mortgage, submitted loan applications on behalf of borrowers that contained material misrepresentations about the borrowers' financial condition.  They also submitted false documents in connection with the loan applications, including but not limited to, appraisals that inflated the true value of the properties, appraisals that represented that they were prepared by licensed appraisers when they were really prepared by unlicensed appraisers, and employment and income verification documents that misrepresented the borrowers' employment status and overstated the borrowers' income.  In addition, the conspirators arranged for the payments associated with the loan transactions to be distributed contrary to the representations to the lender about how the loan proceeds would be distributed, and they inflated sales prices so that the conspirators could obtain money at the real estate closings.  Gillen, according to the indictment charging him, also prepared fraudulent appraisals despite not being a licenses appraiser, that overstated the true market value of the properties acting as collateral for the loans.
John Chiavetta, Sharon Chamberlain, and Aaron Thompson, according to the indictments charging them, were conspirators in the scheme that acted as buyers and borrowers of properties knowing that the loan applications contained misrepresentations and many of the supporting documents submitted to the lending institutions were fraudulent.