MORTGAGE LOAN COMPLIANCE®

The first of four participants in a foreclosure fraud scheme that targeted mortgage lenders and homeowners has been sentenced to nearly five years in prison. U.S. District judge Deborah K. Chasanow has sentenced Earnest Lewis of Takoma Park, Md., to 54 months in prison, followed by three years of supervised release.

The defendant also agreed to forfeit $2.2 million gained from the scheme.

According to Rod J. Rosenstein, U.S. attorney for the District of Maryland, Earnest Lewis' brother, Michael Lewis, aired TV ads claiming he could save financially vulnerable individuals' homes from foreclosure. The Lewis brothers and mortgage loan officer Winston Thomas fraudulently promised to help homeowners keep their homes by temporarily using the "good credit" of Earnest Lewis to refinance their homes after they signed their homes over to Earnest Lewis for roughly one year. In the meantime, they could remain in their homes by paying "rent."

The victims' bank accounts were directly debited by an account belonging to co-conspirator Cheryl Brooke's company, In the House Technologies. Michael K. Lewis, Brooke and Thomas have all pleaded guilty and are scheduled for sentencing in September.

Another real estate company owner who obtained over $4 million in mortgage loans through fraudulent means has pleaded guilty for his role in a different real estate scam.

Michael I. Striker of Minnetonka, Minn., was the president and sole owner of U.S. Equities of Minnesota, a real estate company that entered into 21 real estate loans with Associated Bank from March 2003 to September 2003, according to Frank J. Magill, U.S. attorney for the District of Minnesota.

A co-defendant was a construction loan officer at the bank who processed and approved the loans, which totaled more than $4 million. Striker admitted those loans were approved based on false and misleading information he submitted. In total, Striker obtained more than $724,000 in cash back at the closings on the loans. Although the loans were purported to be for construction rehab projects, Striker admitted he used some of the loan funds for unrelated expenses and debts.

Furthermore, Striker paid more than $100,000 in brokerage fees to a mortgage brokerage company even though it did not broker any of the loans. U.S. District Court Judge Joan Ericksen will determine his sentence at a future date.

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