Saturday, April 02, 2005

24-year-old gets 24 months in fraud case

Judge orders her to pay mortgage company almost $1 million
News Staff Reporter

A former mortgage company employee accused of falsifying loan applications in a scheme referred to as "bankruptcy for profit" was ordered to repay nearly $1 million to a Pittsfield Township company and serve two years in federal prison.

The sentence was handed down Wednesday against 24-year-old Kristy L. Hess of Ypsilanti, who pleaded guilty to one count of bank fraud in exchange for 10 other counts being dismissed.

U.S. District Judge John Corbett O'Meara was allowed to consider all 11 counts in the indictment when he sentenced Hess to 24 months imprisonment followed by four years of supervised release and restitution of $987,426 to ABN AMRO, which has offices in Pittsfield Township.

Hess worked as a correspondent service representative, screening loan applications, for InterFirst Wholesale Mortgage Lending in Ann Arbor, a subsidiary of Netherlands-based ABN AMRO Bank N.V.

Authorities have said that others were involved in the scheme - including a Dearborn loan officer - but Hess has been the only person charged.

Shannon Bass, a spokeswoman in the U.S. Attorney's Office in Detroit, said the investigation is continuing and she could not discuss whether additional people will be charged. She also said she did not know how much money Hess received for her involvement in the scheme.

The case came to light in October 2002 based on an anonymous phone call to bank officials.

Hess admitted in court that when she worked for InterFirst in September and October of 2002, she falsely entered information during the processing of mortgage applications. According to federal documents, Hess called the scheme "bankruptcy for profit" and told the anonymous tipster that she was receiving money from mortgage brokers to approve loans.

The affidavit said that Hess was approving loans as refinances when they were actually for new purchases of property, and the properties were represented with a higher value than they were worth. The borrowers would then declare bankruptcy after a period of time and keep some of that money.

Bank officials told federal investigators they discovered Hess had inappropriately processed loans and had falsely noted that loan conditions had been met when they had not for the Dearborn loan officer, the affidavit said. When officials looked at the loans submitted by that broker, they found that many were mortgaged above the value of the property, records indicated.

ABN AMRO company executives could not be reached for comment.


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