Attorney General Thurbert Baker announced today that his office had obtained a guilty plea from a member of a mortgage fraud scheme that targeted properties in Gwinnett and Dekalb Counties. Charlie Smith of Atlanta pled guilty to one count of Residential Mortgage Fraud in Gwinnett Superior Court. Judge Melody Conner sentenced Smith to a seven year sentence, with the first 120 days of that sentence to be served in the Gwinnett County Detention Center. In addition, Smith was received a fine of $1,000.00 and was ordered to pay restitution to the victims, Fremont Investment and Argent Mortgage. The amount of the restitution to be paid will be determined by the court at a later hearing.
The fraud involved over-inflating the value of the targeted properties utilizing fraudulent appraisals and obtaining inflated bank loans with fraudulent loan applications. The fraud ring also employed fake mechanic's liens on the property to suck money out at closing, claiming that money was owed for work done on the house which in reality had never been done.
The alleged central figure in this mortgage fraud scheme was Jason Edward Brenner. Brenner recruited Charlie Smith into the ring to line up "straw buyers" for the targeted properties. These "straw buyers" would qualify for the inflated loans utilizing the fraudulent loan applications. These "straw buyers" would then show up at closing to sign the loan documents so that the bank would release the closing funds, which would include the money to pay off the fictional mechanic's liens. The fraud ring would then pocket this money, leaving the bank to foreclose on the properties which were worth just a fraction of what the bank had loaned out.
Attorney General Baker drafted the Residential Mortgage Fraud in 2005 to combat mortgage fraud rings targeting Georgia neighborhoods. The legislation, which went into effect in May 2005, allows the Attorney General or local prosecutors to target mortgage fraud rings for prosecution. Mortgage fraud, if left unchecked, can result in higher interest rates for consumers as banks raise their rates to cover losses from fraud, higher property taxes as county assessors plug in the over-inflated values of mortgage fraud properties into setting comparable values for other homes in an area, and increased crime for a neighborhood after drug rings move into abandoned fraud properties that are often unoccupied after the fraud ring has made its profits at the closing.
Smith, as part of his plea agreement, has agreed to testify against Jason Edward Brenner, the alleged ring leader of this fraud conspiracy. Brenner failed to appear for trial in August 2006, and there is currently a bench warrant out for his arrest. Brenner is charged with three counts of Residential Mortgage Fraud. The Georgia Attorney General's office and the Gwinnett County Police Department are asking that anyone who has information of Brenner's whereabouts to please contact Detective Amanda Cain at (770) 513-5366.
Assistant Attorney General David McLaughlin handled the prosecution of the case on behalf of the State, and Detective Amanda Cain of the Gwinnett County Police Department led the State's investigation..