A Katy resident is among three people named in a 19-count mortgage fraud indictment unsealed in Houston federal court late yesterday.
Ming Shan Zhu, 57 of Katy and the owner of Catco Homes was among those indicted.
Also charged were Alvin Mark Eiland, 45, former owner of Future Mortgage Company Inc. and Gary Leonard Robinson II, 28, a former employee of Future Mortgage Company Inc. Eiland and Robinson are both from Houston.
The trio was charged with crimes arising from a scheme to defraud residential mortgage lenders of more than $7 million in loans in connection with home purchases in the Houston area.
The indictments were jointly announced on Thursday by U.S. Attorney Tim Johnson, FBI Special Agent in Charge Richard C. Powers and Internal Revenue Service – Criminal Investigations Special Agent in Charge Rodney E. Clarke.
All three faces charges of conspiracy to commit wire fraud, wire fraud, conspiracy to commit money laundering and money laundering.
Zhu and Robinson surrendered to federal authorities yesterday and were released following a hearing before U.S. Magistrate Stephen Wm. Smith. Zhu was released after posting a $5,000 cash deposit of a $50,000 bond. Robinson was ordered released on a $50,000 unsecured bond.
Eiland, who made his initial appearance last week, was been ordered released upon posting a $20,000 cash deposit of a $100,000 bond.
U.S. District Judge Lynn N. Hughes will preside over the case which has been set for trial in late March.
According to allegations contained in the indictment, over a two-year period beginning in August 2004, Eiland, Robinson and Zhu located properties for sale in the Houston area. Eiland and Robinson then recruited individuals with good credit to act as borrowers in applications for residential mortgage loans to purchase one or more of these homes.
The borrowers were allegedly paid cash to use their name and credit and told the homes would be rented out for a year. Eiland and Robinson, according to the indictment, would then sell the home at an inflated price determined by Zhu, resulting in a significant profit.
Eiland and Robinson, according to the allegations in the indictment, set up sham construction companies to which Zhu would forward money at closing. Eiland generally told each borrower he would buy the home in the borrower’s name, make any monthly mortgage payments, find others to live in the home and pay monthly rent, take the home out of the borrower’s name after a period of time and compensate the borrower.
Eiland and Robinson then allegedly completed Uniform Residential Loan Applications in the names of the borrowers that overstated their employment income and other assets, understated or omitted debts and other liabilities, falsely represented that the borrowers leased the homes they resided in and received income from the rent and falsely claimed that the borrowers intended to occupy the newly purchased homes. All of those claims were material to the lenders’ decisions to approve the applications and fund the loans.
In support of the fraudulent loan applications, Eiland and Robinson are accused of submitting “false and fraudulent documentation,” including sham lease agreements and bogus employment information.
At or near the closings for those home purchases, the indictment alleges Eiland, Robinson and Zhu caused title companies to disburse the fraudulently-induced loan proceeds to various individuals and entities, including Catco Homes and the sham construction companies.
Eiland, Robinson and Zhu are also accused of having represented to the title companies that the sham construction companies had been hired for projects to improve those properties when, in fact, the improvements were not made or were already in the home since the home purchased was a newly constructed home.
If convicted, the maximum penalty for each wire fraud and money laundering count is 20 years in prison, as well as substantial fines. A conviction for money laundering carries the most significant fine of $500,000, or twice the value of the property involved in the transaction, whichever is greater.
The investigation leading to the charges was conducted by the FBI and the IRS.
Assistant United States Attorney Jennifer Lowery is prosecuting the case.
By: John Pape on Fri, Feb 5, 2010
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