A former NFL defensive lineman is among five people indicted for their alleged roles in a multimillion-dollar mortgage fraud scheme in Texas.
The indictment charges that the defendants — including two bank loan officers, an appraiser and a developer — obtained $42 million in fraudulent loans from three Houston banks between 1999 and 2001.
Prosecutors said the scheme relied on inflated appraisals and shell companies to divert loan proceeds from the sale of apartments that had been converted into condominiums.
The five defendants charged with 12 counts of bank fraud are real estate developer Jerome Karam, 44, of Friendswood, Texas; former NFL star Dwight Sean Jones, 44, of Beverly Hills, Calif.; loan officers Tommy Jay Trammel, 44, and David Ranostaj, 40, both of Houston; and appraiser Jay Westrick, 44, of Houston. Each count carries a possible sentence of up to 30 years’ imprisonment, and a fine of up to $1 million
According to the indictment, Karam was a real estate developer who specialized in converting apartments to condominiums. Jones, who became a sports agent after his 12-year NFL career ended in 1996, allegedly invested in those projects and recruited his clients as investors.
Karam and Jones are accused of working with Trammel and Ranostaj — former loan officers with Southwest Bank of Texas, Bank of Houston and Whitney National Bank — to obtain loans for unqualified borrowers for amounts that exceeded the value of the property.
Westrick, a licensed appraiser, is accused of preparing inflated real estate appraisals, in amounts prosecutors said were dictated by Karam without independent analysis.
To divert money from closings, Karam, Jones, Trammel and Ranostaj allegedly created shell companies, including Jet Landscaping, which never actually did any business.
At closings, Karam allegedly inserted a line item in the HUD-1 closing statement for fees owed to Jet Landscaping. The money actually ended up in Karam’s hands, prosecutors said, and the line-item disbursements were hidden from the lenders.
The signature page of the lender-approved closing statement would allegedly be attached to a closing statement with a different distribution of the seller’s funds, leaving lenders to rely on the fraudulently certified closing statement.
“Mortgage fraud continues to be a major crime problem here in the Houston area,” said Alex Turner, the special agent in charge of the FBI’s Houston division, in a press release. Turner said the FBI has several mortgage fraud investigative initiatives underway, and the Houston Area Mortgage Fraud Task Force will be involved. He requested that anyone with information on suspected mortgage fraud cases in the area call (713) 693-5000.