Thursday, February 7, 2008

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Three Indicted in $3 Million Mortgage Fraud Scheme Spanning Four Northeast Texas Counties

CORSICANA A Navarro County grand jury today indicted three defendants for engaging in an organized mortgage fraud scheme. According to prosecutors, the four-county criminal conspiracy, which involved loans backed by the U.S. Department of Housing and Urban Development (HUD), cost the agency more than $3 million. Texas Attorney General Greg Abbott’s Criminal Prosecutions Division is leading the prosecution in this case, which state authorities are pursuing with Navarro County Criminal District Attorney R. Lowell Thompson, as well as the Henderson, Ellis and Kaufman County District Attorney Offices.

According to the first-degree felony indictments, Darrell L. Marriott, 54, and Kandace Y. Marriott, 51, of Gun Barrel City in Henderson County, as well as Karen Hayes, 56, of Kemp in Kaufman County, engaged in a criminal conspiracy involving the sale of manufactured homes.

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Karen Hayes

Darrell Marriott

Kandace Marriott
Indictment against Karen Hayes
Indictment against Darrell Marriott
Indictment against Kandace Marriott

Evidence obtained by investigators indicates the defendants, doing business as One Way Home & Land, falsified residential loan applications in order to ensure that the buyers’ loans were approved by mortgage lenders. According to prosecutors, the defendants illegally forged purchasers’ signatures, inaccurately completed loan applications, and falsified supporting documents, including the buyers’ rent payment verification statements, proof of employment, and Social Security Administration benefits information, among other documents.

The multi-county criminal conspiracy was uncovered by Corporal Mark Nanny of the Corsicana Police Department, who subsequently brought in HUD officials. Assistant Attorney General David Glickler is prosecuting the case for the Attorney General’s Office.

According to authorities, the scheme involved predominantly low-income purchasers whose residential loans were guaranteed by HUD. As a result, when the unqualified buyers defaulted on their home loans, their mortgage lenders did not suffer financial losses. Instead, HUD had to cover the costs. As a result, investigators believe the defendants’ scheme cost the taxpayers more than $3 million.

After it became clear the conspiracy encompassed multiple counties, prosecutors with the Office of the Attorney General offered assistance to the district attorneys in whose jurisdictions the criminal conduct occurred. In 2007, the Texas Legislature passed a law allowing the Office of the Attorney General to formally offer prosecutorial assistance to local district attorneys who otherwise retain exclusive original prosecutorial jurisdiction in most cases. Prior to the passage of Senate Bill 2037, Texas law did not allow the Attorney General to proactively offer prosecutorial assistance to local prosecutors.

A first-degree felony conviction can result in five to 99 years or life in prison, and a maximum $10,000 fine.

In September 2007, Attorney General Abbott launched the Texas Residential Mortgage Fraud Task Force, a partnership that involves key state regulatory agencies in taking a proactive stance toward tracking and prosecuting mortgage fraud.