Participants in Mortgage Fraud Scheme Sentenced to Prison

On February 4, 2009, four people were sentenced for their roles in schemes that fraudulently secured more than $2.6 million in mortgage loans in 2003, 2004 and 2005.

• Donald F. Green was sentenced to 36 months in prison, followed by five years of supervised release, and ordered to pay $1,282,514 in restitution to Stillwater Capital Partners and 23 victim banks, jointly with his co-conspirators, and ordered to pay $230,376 in restitution to the Internal Revenue Service (IRS). Mr. Green plead guilty to one count each of conspiracy, income tax evasion, and bank fraud.

• George T. Jordan was sentenced to 12 months and one day in prison, followed by three years of supervised release, 416 hours of community service, and ordered to pay $1,182,691 in restitution to ABN Amro. Mr. Jordan plead guilty to one count of conspiracy and one count of money laundering.

• Aryeh M. Schottenstein was sentenced to 42 months in prison, followed by three years of supervised release, 416 hours of community service, and ordered to pay $3,740,173 in restitution to the victim financial institutions. Mr. Schottenstein plead guilty to one count each of conspiracy and money laundering.

• Jeffrey M. Lieberman was sentenced to 16 months in prison, followed by three years of supervised release, and ordered to pay $400,000 in restitution to Stillwater Capital Partners. Mr. Lieberman plead guilty to one count each of conspiracy and money laundering.

Mr. Jordan was a real estate agent who generated a mortgage fraud scheme, selling houses at inflated prices and splitting the excess funds received from the mortgage lender with his co-conspirator, Mr. Griffin. Mr. Schottenstein and Mr. Lieberman solicited funds from private investors interested in renovating houses in distressed neighborhoods. A substantial amount of those funds was used to purchase houses from Mr. Green, who owned hundreds of houses in distressed areas of Columbus, Ohio, at prices well in excess of their true values. Mr. Griffin helped locate “straw buyers” for those houses and also received funds for renovation purposes.

Mr. Schottenstein and Mr. Lieberman owned a company called Parkview Bank. One of Parkview Bank’s business purposes was to locate financing for real estate investors seeking to buy and renovate houses in Columbus. Parkview Bank needed a source for the financing for this venture. In 2003, Mr. Schottenstein and Mr. Lieberman met with the managing partners for Stillwater Asset Backed Fund to convince them to provide the funding. They were successful. Parkview Bank and Stillwater Asset Back Fund entered into an agreement whereby Stillwater Asset Bank Fund would provide the funding for Parkview Bank’s deals

Rather than abide by the agreement and locate legitimate investors, Mr. Schottenstein used Mr. Griffin to recruit straw-buyers to pose as real estate investors. Using straw-buyers was quicker and easier than locating legitimate real estate investors thereby making it easier to generate more loan origination fees. The straw-buyers were told by Mr. Griffin they did not need to renovate the houses or make monthly interest payments. Mr. Griffin assured them he would take care of all the details.

Mr. Griffin also recruited straw buyers in 2002 and 2003 for Jeff Pearson, now deceased. Mr. Pearson bought dozens of low-income distressed houses in Columbus for amounts at or near their fair market value. The houses were in need of renovation. Very little if any renovation was done to the houses. The houses were sold to Mr. Griffin’s straw-buyers for two to three times the amounts Mr. Pearson had paid only a few weeks or months earlier. Despite having good credit, the straw-buyers usually had little income. At the closing on the straw-buyers’ purchases of the houses, the title companies issued large checks payable to Mr. Pearson as proceeds from the sales.

All four men we sentenced to lengthy prison terms for their involvement in this complex mortgage fraud case.