California Man Pleads Guilty to Mortgage Fraud Conspiracy, Money Laundering $12.6 Million Scheme Involved New, Upscale Homes in Lee’s Summit, Raymore

KANSAS CITY, MO – August 21, 2009 – (RealEstateRama) — Matt J. Whitworth, Acting United States Attorney for the Western District of Missouri, announced that an Anaheim, Calif., man pleaded guilty in federal court today to his role in a $12.6 million mortgage fraud conspiracy that involved 25 upscale residential properties in Lee’s Summit, Mo., and Raymore, Mo.

Jerome Shade Howard, 40, of Anaheim, pleaded guilty before U.S. Chief District Judge Fernando J. Gaitan this morning to the charges contained in an Oct. 29, 2008, federal indictment. Howard admitted that he received more than $900,000 in illegal kickbacks as part of nearly $8.5 million in fraudulent mortgage loans.

Howard is among 12 defendants who have pleaded guilty to the scheme to buy and sell new homes – all of which were built by Jerry R. Emerick, 39, of Raymore – in the Raintree and Belmont Farms subdivisions in Lee’s Summit and the Eagle Glen subdivision in Raymore. Buyers purchased the homes at inflated prices, obtaining mortgage loans for more than the actual sale price by providing false information to mortgage! lenders, then kept the extra proceeds. Buyers created shell companies for the purpose of receiving those kickbacks from Emerick, with kickbacks of up to $125,000 on each house.

Emerick owned and operated Ty Construction and Residential Contracting, LLC, which was engaged in the business of residential construction, primarily in Lee’s Summit and Raymore. He pleaded guilty on April 9, 2009, to conspiracy to commit mortgage fraud and wire fraud and to transfer funds obtained by fraud across state lines.

In total during the course of the conspiracy from June 2005 to May 2007, mortgage lenders approved loans for 25 homes totaling more than $12.6 million. From that total, buyers received approximately $2.3 million without the lenders’ knowledge.

Howard admitted that he obtained false Social Security numbers for two buyers to use in obtaining loans for the purchase of properties; solicited and obtained five buyers who fraudulently purchased properties; prepared and submitted false information and documents in connection with mortgage loans; dealt with co-conspirators; personally purchased two properties during and as part of the conspiracy; and obtained funds from the mortgages on his own purchases as well as on the purchases of others.

Howard was involved in fraudulent mortgage loans that totaled $8,499,790, from which he received a total of $900,731. By pleading guilty today, Howard also agreed to forfeit to the government $900,731, representing the amount of proceeds he obtained during the scheme.

Under federal statutes, Howard is subject to a sentence of up to 15 years in federal prison without parole, plus a fine up to $500,000 and an order of restitution. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.

This case is being prosecuted by Assistant U.S. Attorney Linda Parker Marshall. It was investigated by the Federal Bureau of Investigation and IRS-Criminal Investigation

Contact: (816) 426-3122