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August 12, 2008

More charges for 4 in home loan fraud scandal

AG: Henderson County DA involved in prosecution of cases that have cost millions in taxpayer dollars

Special to the Review

Two Henderson County residents and their daughter were among three defendants arrested last week in connection with a four-county scheme to defraud the government, Texas Attorney General Greg Abbott’s office reports.

Kandace Marriott, 52, and Darrell Marriott 55, of Gun Barrel City and Kally Marriott, 22, of Dallas, were arrested at their residences last Thursday. They were booked into the Kaufman County Jail with bond set at $5 million each. Karen Hayes, 57, of Kemp surrendered to Kaufman County authorities Thursday and was also being held on a $5 million bond.

They each face five Kaufman County felony offenses for allegedly scheming to forge signatures and falsify home loans for prospective buyers who would not have qualified for HUD backed loans. The specific charges are:

• Engaging in organized criminal activity;

• Making false statements to obtain property or credit;

• Securing the execution of documents by deception;

• Misapplication of fiduciary property; and

• Money laundering.

The AG received assistance from the Kaufman County Criminal District Attorney’s Office, the FBI and the U.S. Department of Housing and Urban Development’s (HUD) Office of Inspector General during several month long investigation. District attorney offices in Navarro, Henderson and Ellis counties are assisting in prosecuting the cases.

The defendants have operated a Kaufman County real estate business since late 2005 known as Torenia Inc., doing business as Energy Homes. Because the four continued to operate this allegedly fraudulent enterprise even after the announcement of the Navarro County indictments in February, Abbott’s prosecutors sought and received a court order Friday increasing their bonds to $100,000 each in the pending Navarro County case. The four closed their previous Navarro County business, One Way Home & Land, after litigation and investigations in late 2005 and moved their enterprise to Kaufman County under a new assumed name, Torenia.

Another defendant indicted in Navarro County last March, employee Bret Harwell, 45, pleaded guilty Friday in district court to securing the execution of a document by deception, a state jail felony. He will serve two years probation. One other defendant, Debra Grace, 47, pleaded guilty to a second-degree felony charge of securing the execution of a document by deception. Grace was placed on eight years probation.

The alleged scheme to defraud HUD cost the federal government and taxpayers millions of dollars, the AG’s office said. According to the state’s action, the four supervised the falsification of residential loan applications to ensure that the buyers’ loans would be approved by mortgage lenders.

Investigators found that the defendants repeatedly falsified supporting documents and information, including the buyers’ rent payment verification statements, proof of employment and information about Social Security Administration benefits, among other documents.

The defendants targeted lower-income purchasers whose residential loans would be guaranteed by HUD, the AG’s office said. As a result, when unqualified buyers soon defaulted on their home loans, their mortgage lenders did not suffer the losses. Instead, HUD — as guarantor of the loans — had to cover these costs. In the Navarro County scheme, investigators believe the four cost the taxpayers more than $3 million.

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