Businessman Pleads Guilty to $50 Million Mortgage Fraud Scheme

Arizona morgage fraud schemeA real estate investor and ringleader of an operation responsible for nearly $50 million of mortgage fraud pleaded guilty on June 20 in a federal court, the Justice Department announced.

Brett Matheson, 46, president and CEO of Maricopa Property Investment Solutions Inc. of Phoenix, Ariz., admitted recruiting "straw buyers" during real estate seminars to submit false mortgage applications as part of a conspiracy to commit wire fraud.The case against Matheson and his two co-conspirators, who also pleaded guilty, resulted from an investigation by the IRS's Criminal Investigation Division and the FBI.

"This guilty plea reminds us of the destructive role mortgage fraudsters played in the financial crisis that has impacted every Arizonian and the entire country," U.S. Attorney Dennis K. Burke said in a statement.

"Schemes like this have destroyed property values, crippled lending institutions, and ruined entire neighborhoods in our community. It has resulted in the loss of tax revenues and jobs," Burke added.

From January 2005 through September 2006, Matheson shepherded the submission of phony mortgage loan applications for unqualified straw buyers -- applications full of false information regarding employment, income and assets, including altered pay stubs, false bank statements and bogus verifications of employment.

Matheson himself secured financing for the purchase of two properties using altered pay stubs and fake employment verification. At closing, a portion of the seller's proceeds were kicked back to a company controlled by Matheson and his co-conspirators.

The conspiracy between Matheson's company and the straw buyers was hidden from lenders, and kickbacks were often used to make down payments in order to qualify additional straw buyers for financing on other properties.

The scheme involved nearly $50 million worth of fraudulent loans for 52 properties, resulting in almost $20 million of losses to lenders.

"Mortgage fraud threatens the financial health of our communities," said Dawn Mertz, special agent in charge of the Phoenix field office of the IRS' Criminal Investigation Division, said in a statement. "IRS Criminal Investigation and our law enforcement partners are committed to following the money trail to ensure those who engage in illegal activities, such as Matheson, are brought to justice,"

Matheson faces a maximum fine of $1 million, 30 years in prison or both for a single count of conspiracy to commit wire fraud.

The dismantling of Matheson's operation was part of a sweep known as "Operation Stolen Dreams," which led to the indictment of dozens of defendants -- many of them in the real estate business -- in the summer of 2010. To date, those indictments have led to 27 convictions.
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