Why It Is Important To Choose The Right Illinois Real Estate Attorney

Springfield, IL - Two central Illinois men who operated a Springfield business known as Central Illinois Real Estate pleaded guilty today to defrauding banks and mortgage companies of more than $500,000 in a mortgage fraud scheme in the late 1990s. The U.S. Attorney for the Central District of Illinois, Jan Paul Miller, announced that Randolph McAfee, age 38, 2600 South Pasfield, Springfield, Illinois, and Darrin Shipley, age 37, of 1104 North Maplewood Avenue, Peoria, Illinois, were charged in an information with one count of bank fraud.

During a court appearance today before U.S. Magistrate Judge Byron Cudmore, McAfee and Shipley waived indictment and admitted that during 1997 and 1998 they sold approximately 100 properties in a mortgage fraud scheme.

In 1997, McAfee and Shipley established a business known as Central Illinois Real Estate Inc. to buy and re-sell houses and small apartment buildings in and around central Illinois. They were especially interested in properties in need of repair or that would be sold through a distress sale such as a tax or foreclosure sale.

McAfee and Shipley admitted that they advertised that individuals interested in owning property could purchase properties through them with "no down payment" or "no money down." McAfee and Shipley showed properties to people who responded to their ads and led those people to believe that Central Illinois Real Estate already owned those properties. When any of their customers expressed interest in a particular property, McAfee and Shipley contracted to buy the property from its owner and separately contracted to sell it to their customer. The price they placed on the sale of the property to their customer was always much higher than the price they themselves agreed to pay for it. Often, they bought and sold property on the same day.

In court, McAfee and Shipley admitted that the prices at which they contracted to sell properties were artificial prices. Those prices were inflated simply to increase the amount of mortgage loans their customers could obtain. McAfee and Shipley's customers typically sought mortgage loans that were 75% to 80% of the artificial purchase prices. Yet, each loan amount always exceeded the amount that McAfee and Shipley paid to acquire a property. Thus, they made a profit on each sale without receiving a downpayment from any buyer. While certifying to the mortgage companies that they received downpayments from the buyers, McAfee and Shipley in fact received no downpayments and accepted only the mortgage loan proceeds as payment in full.

Further, McAfee and Shipley admitted that they assisted buyers in completing and submitting loan applications which often contained false information, including falsely inflated figures for borrowers' bank account balances. When lenders requested verification of the balances, McAfee and Shipley prepared false Verification of Deposits to reflect higher balances in the borrowers' accounts than they actually had. Shipley admitted that he signed the false documents using names of real or fictitious bank officers.

The negotiated plea agreements entered today specifically detail transactions related to the 1997 purchase and sale of Springfield properties located at 1126 and 1130 East Miller Street. During the summer of 1997, McAfee and Shipley purchased the two adjacent properties for a total of $35,000. They persuaded a buyer to agree to purchase one of those properties for $65,000. They assisted the buyer in obtaining a mortgage loan for an amount that exceeded the price that McAfee and Shipley had paid for both properties, namely, $39,000. McAfee and Shipley falsely represented to the bank that the borrower would pay the difference between the stated purchase price and the loan amount. In fact, McAfee and Shipley intended to and did accept the loan amount as payment in full for the property. They also prepared and submitted a false Verification of Deposits form which reflected that the borrower had more than $15,000 in a bank account.

The charge is the result of an investigation by the Federal Bureau of Investigation. The case is being prosecuted by Assistant U.S. Attorney Joseph H. Hartzler.

Sentencing for both defendants was scheduled for April 11, 2005, at 2:30 p.m. before U.S. District Judge Richard Mills.

The offense of bank fraud carries a maximum statutory penalty of 30 years imprisonment and a fine of $1,000,000. The parties, however, have agreed that the appropriate term of imprisonment is 20 months. If the Court accepts the defendants' guilty pleas, it must impose that sentence of imprisonment. If the Court declines to impose a sentence of 20 months imprisonment, then the defendants will be given an opportunity to withdraw their guilty pleas.

The parties admitted that, based on the information available to them currently, they are not able to calculate the actual losses the mortgage companies suffered due to the fraud. They estimate the loss at $500,000 to $800,000, but agree that the total actual loss may in fact be higher or lower than those figures. Consequently, no agreement has been reached concerning the amount of restitution.