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Former loan officer gets prison for mortgage fraud scheme

POSTED: April 9, 2009 5:35 p.m.

Andrew John Smith, 29, of Cleveland, was sentenced today by U.S. District Judge William C. O'Kelley in Gainesville to serve more than three years in prison on a federal charge of conspiracy to commit bank, wire and mail fraud arising from a mortgage fraud scheme.

Smith was sentenced to three years, six months in prison to be followed by five years of supervised release. The court has ordered Smith to pay restitution but has not yet set a final amount. Smith pleaded guilty to the charge on Jan. 9.

In early 2007, Smith was employed as a part-time loan officer by United International Mortgage in Buford, when he originated a fraudulent loan for his own residence, according to U.S. Attorney David E. Nahmias and information presented in court.

Smith was later recruited by an United International co-conspirator not named in the indictment to refinance loans with other lenders, as well as to sell the mortgage company foreclosed properties on which construction was not complete to unqualified straw borrowers funded by other lenders. Smith's own loan for his residence had been included in the company's portfolio of non-performing loans facing imminent foreclosure.

On June 9, Smith and his co-conspirator were caught in a "sting" after Smith had arranged for the sales price of a Pendergrass, property to be inflated from $2 million to $4 million. Prior to his arrest, Smith submitted fraudulent documents to federally insured banks to arrange a $3.2 million purchase money mortgage loan to finance the purchase of the property. Smith then negotiated a side agreement with the sellers, who were, unbeknownst to Smith, cooperating with the Federal Bureau of Investigation, for the secret kickback of $2 million to his shell company. Smith was arrested by federal agents at the property during a subsequent meeting to negotiate his multi-million dollar kickback for the "deal."

The property at issue was sold for its true market value of $1.8 million immediately upon conclusion of the FBI's sting operation. The FBI investigation is ongoing.

This case was investigated by FBI special agents and the Office of Inspector General for the Federal Deposit Insurance Corp. Assistant U.S. Attorney Gale McKenzie prosecuted the case.



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