Couple sentenced to prison in Henderson mortgage fraud
A Texas couple who ran two mortgage industry businesses in Henderson have been sentenced to federal prison in one of Southern Nevada’s largest mortgage fraud schemes.
Derrick Phelps, 46, former owner of Investors Reality and Enterprise Mortgage Service, was sentenced Tuesday to nearly six years behind bars. His wife, Cynthia Phelps, 44, was given a four-year prison term.
U.S. District Judge James Mahan also ordered both defendants, who pleaded guilty to conspiracy and fraud charges earlier this year, to serve five years of supervised release after prison and pay roughly $31 million in restitution. They must surrender to federal prison authorities on March 6.
More than 230 properties valued at $83 million were illegally bought during the scheme between January 2003 and November 2006, prosecutors alleged. Financial institutions lost more than $30 million when the defendants and their co-conspirators defaulted on the mortgage loans and the properties went into foreclosure, according to prosecutors.
The scheme is alleged to have involved recruiting straw buyers, inflating housing values and providing false information on mortgage loan applications.
Prosecutors had sought prison terms of more than 10 years for Derrick and Cynthia Phelps, but Mahan ended up settling on the lighter sentences.
Contact Jeff German at jgerman@reviewjournal.com or 702-380-8135. Follow @JGermanRJ on Twitter.
