McGills case highlights problem figuring out who’s at fault in mortgage fraud
September 13th, 2009 by Daphne DuretPORT ST. LUCIE — It was 2006, and though the housing market had already begun to crash the three women who invested with Rodney McGill’s Young Millionaires Group thought the pastor and self-made real estate guru could teach them how to the make the millions he’d made buying and selling property.
Each said they trusted McGill and his mortgage broker-wife, Shalonda, so much that they didn’t hesitate to sign mortgage loan applications with highly exaggerated incomes and other false information the McGills had filled out for them.
Now Patricia Kelly, Sharon Schofield and Cynthia McNair all have ruined credit, and McGill and his wife last week were sentenced to 20 and 10 years in prison, respectively, on racketeering, grand theft and mortgage fraud charges.
As cases of mortgage fraud stemming from the housing boom in the early part of the decade begin to see the light of day, the potential magnitude of the problem also becomes more apparent — especially in former overheated markets like Palm Beach County and the Treasure Coast.
With one of the highest foreclosure rates in the country, fraud investigators fear the McGills’ case is likely the tip of the iceberg. What’s more, the McGills’ case points up the difficulty cited by numerous law enforcement officials that investigate mortgage fraud: pinning down where in the long line of transactions to purchase a home the fraud actually took place.
The McGill’s trial this summer gave a Martin County jury a glimpse not only into the couple’s business practices, but a world where they were the link between buyers and real estate agents, mortgage brokers, title companies and banks who recklessly pushed through one questionable loan after another.
“You have to ask yourself, should Rodney and Shalonda McGill be the only ones sitting here?” Rodney McGill’s attorney Arthur Jones asked jurors who decided the case.
Indeed, state Department of Financial Services Detective Ted Padich said he asked himself the same question during his investigation of the McGills.
Padich and Detective Steven Brigliola investigated the couple full-time for nearly a year.
In each case, the women — Kelly, Schofield and McNair — purchased homes previously owned by the McGills for vastly inflated prices. They said the McGills’ promised to make the mortgage payments until the properties could be sold a second time for more profits, but the homes wound up in foreclosure when the McGills failed to pay.
In most of the cases, the banks failed to make independent appraisals of the properties. In addition, mortgage brokers and title company workers who helped the McGills with the loans failed to ask questions or demand paperwork that would have uncovered possible fraud.
Though the final decision to only charge the McGills came from prosecutors, Padich said he and Brigliola made the couple the target of their probe because they benefited the most from the $1.15 million in fraudulent deals.
“This was a period of time where there were a lot of sloppy loans going through,” Padich said. “But I look at it like this: if you walk into your bank and they’ve left the bank vault open with all the money sitting there, is it okay to take it, even if the bank manager is the one who left it open?”
Padich said he believes out of the thousands of foreclosure cases in Palm Beach County and the Treasure Coast, about half are due to some measure of fraud.
The McGills could be facing more charges tied to fraudulent deals, and investigators recently arrested Rodney McGill while at the Martin County jail on charges he swindled a couple out of $40,000.
Padich said that he and Brigliola turned over the names of people at the title companies in the case to other state agencies.
While he believes that the McGills were most to blame in their case because they orchestrated the fraud, Padich said on a larger scale the banks were ultimately to blame for the reckless lending practices that eventually led the local housing market to crash.
“Had a lot of people in this process done their jobs properly,” he said, “we would not be here.”
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September 14th, 2009 at 12:20 am
Greed, one of the seven deadly sins.
September 14th, 2009 at 2:10 am
Regardless of how many fraudulent mortgages were obtained, these people got caught. Using the “everybody else was doing it” excuse doesn’t work on police officers who ticket speeders and it shouldn’t apply here. The goal isn’t to have bankers and loan processors to unpunished by admitting system-wide tacit approval. The goal is to go after everyone who defrauded the system.
September 14th, 2009 at 6:33 am
How about Kelly, Schofield and McNair. Why weren’t they prosecuted for signing false mortgage applications. They inflated their income and gave false information and expected the McGills to pay the mortgage until the properties sold again. They obviously were getting some money for this. Isn’t this a crime as well. Why weren’t they prosecuted??????
September 14th, 2009 at 8:03 am
The world it’s coming ti it’s end. Pastors preaching, wow, what a free ticket to riches
September 14th, 2009 at 8:52 am
i had a company in wpb for 15 years, i had 50plus employees. one day in 2001, and employee says a mortgage broker was going to come by the corporate office to have a document signed for him to get a mortgage,
a mortgage broker comes to my office and asks me to sign a verification of income for this employee, the paperwork looks pretty close, the employee was making $22 an hour, and the document said he made $40k a year, quickly doing the math, i signed the document.
3 years later the fbi comes to my office and says i have committed bank fraud for signing a false verification of income document, turns out the employee had taken a month off in the beginning of the year, so he only made $35k,
they arrested me, put me thru grueling hell for years, i finally got 6 months in a halfway house, the point, i never commited a fraud, the loan was paid in full, while the fbi was ripping apart my life, the banks were handing out billions to real crooks, so when you read this story about the 3 homeowners they let off, and the preacher and his wife running this huge scam, i wonder, where is the bank, the title company, the appraiser,
it just strikes me as odd as these 2 are the poster boy for the crime,
as soon as i got off probation, i left that miserable state, and have enjoyed watching the cataclysmic end to the paradise they call florida, i hope you realize the value of your home has remained the same for 20 years, that has never happened in history,
September 14th, 2009 at 9:16 am
Sounds like these two were the SCAPE GOATS…
No one in the industry verified thier paperwork and this was done on Purpose.. I worked in the Title Industry and have my brokers license. The people with the licenses were the ones starting these scams. The Banks, Brokers, Agents, No one had any oversight. No one cared because they all made a direct commission off of every home closing. The more expensive the property, the more money made by each party. So it was in everyones best interests to jack the prices up.
So ask yourself, Why would these Prosecuters only go after the ones signing paperwork on the “Flip Deal”? And these Banks looked the other way for thousands of deals. They definately profited more than these 2 people. Remember Home loans are ALL subject to an Inspection and an APPRAISAL. The Appraisal should be the target of that probe, along with everyone else involved. Not just 2 people.
September 14th, 2009 at 9:19 am
HOly Crap Bernie hahahah.. We put almost the same thing down. Sorry to hear about what happend to you. Funny that the Banks never have been charged with anything AND they are taking our tax dollars also. Makes me sick. Have a good day
September 14th, 2009 at 9:44 am
SEE WHAT MONEY DO TO GREDDIE PEOPLE
September 14th, 2009 at 10:18 am
JUS SUM CRAK HEADS ON DA COME ^
September 14th, 2009 at 11:01 am
Reply to Bernie
I smell a lot B.S. in your story.
If the FBI were on your case;and you got 6 months it was for
much more than miscalculating an employeess wages;40K to 35K.
September 14th, 2009 at 11:15 am
the us attorney used the value of the loan as the loss on the pre sentence report, that put the loss at $125k, even though the loan was paid in full, and the person refinanced thru another company, this put my guidelines up to that level of a sentence,
September 14th, 2009 at 11:44 am
Bernie, whatever happened to you sounds horrible, but if you are still lurking on this board and bashing Florida, then you must have some deep-seated issues that were never resolved. FBI, halfway house, 6 months????Really? Nothing else going on? DOUBT IT
September 14th, 2009 at 12:58 pm
I don’t buy it Bernie. I’m thinking that your leaving something out.
March 15th, 2010 at 5:12 am
I need to pay off my mortgage by the end in the month yet don’t believe that I will make it, is it possible to assist?