Monday, December 18, 2006

Varying Sentences in Mortgage Fraud Cases

United States Attorney's Office for the Southern District of Florida issued a press release that Samantha Johnson and Scott Warren Johnson, husband and wife, were sentenced following their guilty please to "a wide-ranging mortgage fraud scheme."  The sentences were 60 months for Samantha Johnson and one year for Scott Johnson.  The press release said that they received "in excess of 2.5 million in ill gotten gains."

Now compare this to the sentence received by Chalana McFarland, a first offender who was sentenced for mortgage fraud (see here) to 30 years imprisonment for her role in an extensive mortgage fraud scheme that skimmed $20 million from the sale of over 100 homes from 1999 to 2002. 

Why such a disparity in sentence?  Could it be that the first group of individuals plead guilty and the second person risked trial?  When the stakes are so high, do you really have a constitutional right to a jury trial?

(esp)

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Comments

Uh, duh? 2.5 million vs. 20 million loss amount explains disparity? Hello?

Posted by: anon | Dec 18, 2006 9:10:44 PM

I respectfully disagree with your commentary regarding the disparity of sentences.

Those criminals who cooperate and spare the State wasted time and resources and plead guilty to their crimes deserve less punishment than those criminals who force the State to take them to trial and expend enormous resources to dispense justice.

A criminal may have the right to trial. However, the criminal who is ultimately convicted after slowing the appropriate application of justice deserves to pay a greater price.

Respectfully,

Sam E. Antar

Posted by: Sam E. Antar (Former Crazy Eddie CFO & ex-felon) | Dec 19, 2006 9:19:41 PM

Why not ask Southern District of Florida blogger David Marcus who represented Samantha Johnson.

Posted by: anon | Dec 21, 2006 8:33:45 PM

The $2.5 million vs. $20 million spread clouds a nonetheless important observation. The federal system is woefully rigged to discourage trials.

The federal sentencing guidelines, advisory or not, are plied everyday by agents and prosecutors like a rack and thumbscrew to persuade "criminals" to cop a plea.

In a recent Kansas City mortgage-fraud case, for example, a defendant charged with one count each of wire fraud and money laundering, initially resisted a plea deal. He argued he'd paid a reputable lawyer to screen all of his property dealings and insisted he'd done nothing wrong. Prosecutors warned him to take the deal or he'd be charged with 188 counts of fraud and money laundering and, if convicted, would serve at least 30 years in prison.

He'd already spent $40,000 for legal fees. Going to trial against the government typically costs about a half million dollars. So after considering the risks and expense, he took the "deal" and ended up with six months of home detention and restitution.

So, 30 years in prison or or home detention? Some would see that desparity as clear evidence the feds don't fight fair. It certainly helps explain why about 96 percent of their cases end in plea deals as opposed to trials.

I hope if I ever get in trouble, Mr. Antar isn't picked for my jury. Money laundering and fraud statutes are broadly drawn and give ambitious, creative career-driven prosecutors lots of room to work. Most honest property traders would concede that virtually any mortgage application can be picked apart by highly motivated agents.

Another important question in the mortgage fraud issue is this: Why are the "victim" lending companies given a free pass? In the Kansas City case, the victim lending company, ABN Amro, admitted it failed to underwrite thousands of loans in four states. Beyond that, it admitted its employees forged the signatures of registered underwriters on apps in order to expedite the loans and therefore make more money for ABN Amro.

However, whereas the government pounces on poor schmucks who fail to dot i's or cross t's, none of the Amro employees who forged documents was prosecuted. The company paid a $41 million fine and as part of the settlement was forgiven for any failure to underwrite loans in the other 46 states, most of which the company later certified to the government as having been properly underwritten.

Oh well.

Best regards, John Kerr

Posted by: John Kerr | Feb 9, 2007 3:41:05 PM

The $2.5 million vs. $20 million spread clouds a nonetheless important observation. The federal system is woefully rigged to discourage trials.

The federal sentencing guidelines, advisory or not, are plied everyday by agents and prosecutors like a rack and thumbscrew to persuade "criminals" to cop a plea.

In a recent Kansas City mortgage-fraud case, for example, a defendant charged with one count each of wire fraud and money laundering, initially resisted a plea deal. He argued he'd paid a reputable lawyer to screen all of his property dealings and insisted he'd done nothing wrong. Prosecutors warned him to take the deal or he'd be charged with 188 counts of fraud and money laundering and, if convicted, would serve at least 30 years in prison.

He'd already spent $40,000 for legal fees. Going to trial against the government typically costs about a half million dollars. So after considering the risks and expense, he took the "deal" and ended up with six months of home detention and restitution.

So, 30 years in prison or or home detention? Some would see that desparity as clear evidence the feds don't fight fair. It certainly helps explain why close to 96 percent of the feds' cases end up in plea deals as opposed to trials.

Beyond that, I hope if I ever get in trouble, Mr. Antar doesn't get picked for my jury. Money laundering and fraud statutes are broadly drawn and give ambitious, creative career-driven prosecutors lots of room to work. Most honest property traders would concede that virtually any mortgage application can be picked apart by highly motivated agents.

Another important question in the mortgage fraud issue is this: Why are the "victim" lending companies given a free pass? In the Kansas City case, the victim lender, the Dutch company ABN Amro, admitted it failed to underwrite thousands of loans in four states. It admitted its employees forged the names of registered underwriters on apps in order to expedite the loans.

However, whereas the government has been quick to pounce on poor schmucks who fail to dot i's or cross t's on loan apps, none of the Amro employees who forged documents was prosecuted. The company paid a $41 million fine and as part of the settlement was forgiven for any failure to underwrite loans in the other 46 states, despite the fact the company had certified to the government that all the loans had been properly underwritten.

Oh well.

Best regards, John Kerr

Posted by: John Kerr | Feb 9, 2007 3:48:55 PM

Any type of mortgage fraud is bad, especially when it hurts the borrower. Mortgage fraud was what I went through in Atlanta GA and it ruined my life. Eugenia Renskoff

Posted by: Eugenia Renskoff | Mar 19, 2008 4:54:03 PM

"Especially when it hurts the borrower?" Why is that different from hurting the lender (which happens to be "real people" too), its investors, the community in which the fraud was perpetrated and the community at large?

Posted by: Ken Cook | Aug 1, 2008 9:45:18 AM

I think a fraud from barrower or lender is equally bad to deflate any economic structured

Posted by: hypotheek uitrekenen | Mar 9, 2009 10:36:23 PM

I respectfully disagree with your commentary regarding the disparity of sentences.

Posted by: Mortgage Repayment Calculator | Oct 29, 2010 10:15:31 PM

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