Raleigh real estate broker sentenced for mortgage fraud scheme during recession
Posted May 21, 2014
Raleigh, N.C. — A 49-year-old real estate broker was sentenced in federal court Wednesday to 3.5 years in prison and ordered to pay $1.6 million for participating in a mortgage fraud scheme during the recession, federal prosecutors announced.
Mark Henry Tkac of Raleigh pleaded guilty to conspiracy to commit mail, wire and bank fraud for his role in a real estate flipping scheme between 2006 and 2008 that defrauded several banks and lenders out of more than $7 million. Tkac was involved along with developers David Lewis Johnson and Arthur Lee Barnes, mortgage broker Mark Thomas Bowe and attorney Jeffrey Scott Taggart. All are currently serving prison time for their roles, prosecutors said.
Tkac and his group persuaded individuals, known as “straw buyers,” to allow their names and credit to be used for mortgage loans in return for kickbacks from loan proceeds, prosecutors said. The straw buyers were unable to pay back the loans and did not have a long-term interest in the properties purchased in their names. The group recruited the straw buyers under the guise that they were participating in an investment plan, prosecutors said.
The scheme was a common one that helped fuel the recession. Lenders issued loans to borrowers for homes they couldn't afford, causing defaulted loans and foreclosures. This led to a nationwide financial crisis, resulting in widespread unemployment.
"Every year, fraudulent schemes victimize individuals and businesses from many walks of life, including struggling low income families lured into loans they cannot afford, and legitimate lenders are saddled with over inflated mortgage loans," Daniel Burget, acting special agent in charge of IRS Criminal Investigation, said in a statement. "This investigation shows IRS Criminal Investigation’s commitment to not allowing those responsible to gain financially from their fraud."
Tkac was originally a straw buyer, then recruited others to serve as straw buyers for Johnson and Barnes. The trio arranged for straw buyers to purchase homes for an inflated price, then directed them to Taggart to finish the transactions, prosecutors said.
The group received several thousand dollars in kickbacks for each fraudulent transaction closed by Taggart, prosecutors said.
"Ultimately, borrowers defaulted on many of the transactions brokered by TKAC, resulting in substantial losses to various banks and lenders," prosecutors said.