A federal judge has ordered an Indianapolis man to serve 37 months in prison and pay $1.7 million in restitution for his role in a massive mortgage fraud scheme.
Timothy A. Brown, 45, pleaded guilty to one count of wire fraud and one count of money laundering. As part of the plea deal, he accepted responsibility for 29 fraudulent loans totaling $4.5 million.
The U.S. Attorney’s Office for the Southern District of Indiana said the scheme involved 149 fraudulent loan transactions totaling $19.7 million between 2003 and 2005.
Brown is the second defendant so far to receive prison time. In September, Charter Homes Inc. founder Jerry J. Jaquess received 30 months in prison. Seven other defendants still have cases pending in front of Chief Judge David F. Hamilton.
The charges followed an investigation by special agents of the IRS Criminal Investigation Division, the U.S. Attorney’s Office and the FBI.
Scheme participants bought homes in Windsor Village near Arlington Avenue and 21st Street in Indianapolis for $50,000 each, the U.S. Attorney’s Office said. Then, with the help of inflated appraisals, they recruited investors to take out $96,000 loans to purchase the homes for $120,000 each.
The buyers were recruited members of an investment club who were paid $4,000 for each home in exchange for using their credit. Most of the investors were in Virginia and never saw the homes.
No payments were made on the mortgages and the lenders lost the entire loan amounts, the U.S. Attorney’s Office said. Many of the duplexes were later resold for between $3,500 and $15,000.
Jaquess and Charter Homes were the subject of an IBJ investigative story last year.