ATLANTA - Two former Bogalusa residents, David Thomas, 46, of Baton Rouge, La. and Dean Thomas, 42, of Atlanta were among 10 defendants convicted here after being charged with multiple counts in a mortgage fraud scheme that involved 50 houses and 250 condominiums.
David Thomas, convicted of conspiracy, loan fraud, and money laundering and Dean Thomas, convicted of conspiracy and money laundering were found guilty in federal court of participating in a scheme that targeted the Atlanta metro housing and condo market from 2000 through part of 2003. The guilty verdicts came at the conclusion of an eight-week trial.
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United States Attorney David E. Nahmias said of the verdicts, "The monetary loss calculated to date is in excess of $41 million, but we expect it to be significantly
higher when we conclude our work. More importantly, this monetary loss, as great as it is, does not fully capture the loss to the many neighborhoods and condominium communities that have been gutted of their value due to this one fraud scheme. These guilty verdicts condemn the corrupt actions of the key people who were responsible for this fraud scheme, from crooked attorneys and appraisers, to loan officers, to the man at the top, Phillip E. Hill. The verdicts in this case take us one step closer to repairing the corroded cornerstone of a large-scale corrupt housing market that has made the metro Atlanta area one of the most active mortgage fraud locations in the nation."
According to testimony, David Thomas and Dean Thomas were both "recruiters," who found "straw purchasers" for the scheme and received hundreds of thousands of dollars in the scheme.
Each property was sold at an inflated price to a "straw purchaser" who applied for a mortgage loan based upon the inflated price. Such a fraudulent transaction is called a mortgage "flip." The straw purchasers who participated in these mortgage flips were paid a kickback out of the excess loan proceeds for the use of their name and credit. The victim-lenders granted the loans based upon numerous false
representations and documents regarding the credit qualifications of the straw purchaser, as well as false representations that the straw purchaser had paid a down payment, would reside in the home, and would be responsible for the loan payment. In addition, the lenders were induced to make the loans based on fraudulently inflated appraisals. Some of the properties were "flipped" more than one time.
Additionally, evidence indicated that both David Thomas and Dean Thomas also served as "straw borrowers" who received additional kickbacks for lending their credit to the scheme.
Sentencing is scheduled for July.
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