Three indicted in alleged $83 million mortgage fraud
Three people were indicted by a federal grand jury Wednesday in what authorities said was an $83 million mortgage fraud scheme.
Derrick Phelps, 44, who ran two now-defunct mortgage industry businesses in Henderson, and his wife, Cynthia Phelps, 34, both of Texas; and an escrow officer, Linda Mack, 49, of North Las Vegas, were charged in the eight-count indictment.
They each face one count of conspiracy to commit bank fraud, mail fraud and wire fraud and seven counts of bank fraud.
Their initial appearances before U.S. Magistrate Judge George Foley Jr. are scheduled for March 22. Between January 2003 and November 2006, the defendants devised a scheme to defraud federally insured financial institutions by recruiting straw buyers, inflating housing values and providing false information on mortgage loan applications, the indictment alleges.
Roughly 233 properties valued at more than $83 million are alleged to have been unlawfully bought during the scheme.
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, the indictment alleges.
Between 2008 and 2012, about 213 people were charged with federal mortgage fraud crimes in the state, and most were convicted, Nevada U.S. attorney Daniel Bogden said.
According to the indictment, false information was provided to the financial institutions about the qualifications of the straw buyers.
As part of the scheme, the indictment alleges, the defendants and their co-conspirators made offers to purchase properties above the sellers’ asking prices. Sellers agreed that part of the excess funds would be redirected to the buyers after phony promises were made to upgrade and repair the properties.
The defendants profited from the unlawful mortgage dealings by obtaining commissions and fees, the indictment alleges. If convicted, Derrick Phelps, the former owner of Investors Realty and Enterprise Mortgage Services in Henderson, Cynthia Phelps and Mack all face up to 30 years in prison and maximum fines of $1 million on each of the eight counts.
Prosecutors are seeking more than
$83 million in a forfeiture judgment from the defendants.
Contact Jeff German at jgerman@reviewjournal.com or 702-380-8135.
