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PRESS RELEASE


Large KC Developer Indicted

KANSAS CITY BUILDER, BUSINESS ASSOCIATES CHARGED WITH $25 MILLION BANK FRAUD SCHEME


 
TOPEKA, Kan. -- (May 18, 2006) A man once known as the largest home builder and developer in the greater Kansas City area has been charged in a 60-count indictment alleging he organized a $25 million scheme to boost his business through conspiracy, bank fraud and money laundering.

The developer, F. Jeffrey Miller, 45, Stanley, Kan., is charged in a 20-page indictment detailing crimes that allegedly occurred from 1997 to the present in Johnson County, Kan. Also charged are Todd Earnshaw, 45, Overland Park, Kan., Brian Rouse, 36, Overland Park, Kan., Paul E. Nicolace, 50, Overland Park, Kan., Angela Parenza, 39, Kansas City, Mo., Elizabeth L. Hessel, 46, Overland Park, Kan., James Moser, 62, Overland Park, Mo., Steve Middleton, 45, Stilwell, Kan., and Lanny Ross, 64, Leawood, Kan..

"Mr. Miller advertised that he could sell homes to buyers with credit problems who had little or no money for a down payment," said U.S. Attorney Eric Melgren. "In fact, with the help of willing co-conspirators, he defrauded banks and coerced buyers."

According to the indictment:

  • Miller operated Miller Enterprises and Star Land Development, which built and developed houses in the greater Kansas City area and was the largest builder in the area in 1999 and 2000. Miller also started two companies called Associated Capital and Associated Finance, formed in June 1998, for the purpose of preparing loan applications on behalf of buyers to acquire homes built by Miller. The applications were made to federally insured financial institutions. Associated Finance serviced second mortgage payments to Miller on homes purchased from him.

  • Angela Parenza and Beth Hessel were loan officers for Associated Capital. Acting under Miller’s control, they did anything required to complete a loan closing, including forging potential buyers’ signatures on loan documents and providing home buyers with down payments and closing costs.

  • Todd Earnshaw and Brian Rouse were loan officers for Maplewood Mortgage and Pronounce Mortgage. Earnshaw was a real estate agent who sold many of Miller’s houses.

  • In 1999, Miller became the subject of lawsuits, actions by state law enforcement agencies and the legislature, and other kinds of adverse publicity. He was the subject of investigations by the Kansas Attorney General, the Kansas Bank Commissioner, and the Missouri Attorney General.

  • In 2001, the Kansas legislature amended the Kansas Mortgage Act to require any person or business that regularly obtained second mortgages to be licensed in Kansas. Miller then adapted and reconfigured the conspiracy. He discontinued doing business through Associated Capital and Associated Finance. He started doing business through middlemen including Steve Middleton and Earnshaw.

  • Paul Nicolace and Lanny Ross, real estate appraisers in the greater Kansas City area, provided inflated appraisals for Miller, Middleton and others.

  • Due to adverse publicity about Miller’s illegal marketing methods and intentionally poor quality of construction, there came a time he had trouble selling houses to individuals. So he began to market his houses to investors to whom he agreed to sell at a discount if they purchased in volume. The discounting was not disclosed to lenders. Miller sold homes this way though middlemen such as Middleton.

Unlawful acts identified in the 20-page indictment include these:

  • Defrauding financial institutions to make loans by means of material false and fraudulent pretenses, representations, promises and omissions of fact. In this way, Miller is alleged to have caused more than $25 million in loans to be made.

  • Falsifying loan documents to qualify home buyers for mortgages for which they would not otherwise qualify.

  • Providing home buyers with down payments and closing costs without the knowledge of lenders.

  • Increasing the sales prices of houses at closing.

  • Manipulating home buyers into moving into houses before closing in an effort to coerce them into accepting last-minute increases in the sales price at closing to avoid losing their homes.

  • Selling houses at discount to investors without disclosing it to lenders. Paying kickbacks to investors out of loan proceeds, concealing the payments by calling them referral fees or interior design fees.

Miller is charged in all 60 counts including:

  • One count of conspiracy.

  • 53 counts of bank fraud.

  • 5 counts of money laundering.

  • One count of criminal forfeiture in which the government seeks the forfeiture of all property traceable to the crime including $25 million, a residence at Foxhead Shores in Stilwell, Kansas, and a 1996 Sararoga II HP airplane.

Among the other defendants,

  • Earnshaw is charged with one count of conspiracy, three counts of bank fraud and one forfeiture count.

  • Rouse is charged with one count of conspiracy, 11 counts of bank fraud and one count of forfeiture.

  • Nicolace is charged with one count of conspiracy, 7 counts of bank fraud and one forfeiture count.

  • Parenza is charged with one count of conspiracy, one count of bank fraud and one count of forfeiture.

  • Hessel is charged with one count of conspiracy, 9 counts of bank fraud, and one count of forfeiture.

  • Moser is charged with one count of conspiracy, 31 counts of bank fraud, 5 counts of money laundering and one count of forfeiture.

  • Middleton is charged with one count of conspiracy, 9 counts of bank fraud, one count of money laundering and one count of forfeiture.

  • Ross is charged with one count of conspiracy, 5 counts of bank fraud, 2 counts of money laundering, and one count of forfeiture.

The penalties for conviction on these charges are as follows:

  • Conspiracy: Up to 5 years in federal prison and a fine up to $250,000 on each count.

  • Bank fraud: Up to 30 years and a fine up to $1 million on each count.

  • Money laundering: Up to 10 years and a fine up to $250,000.

Housing and Urban Development, Office of Inspector General, investigated the case. Assistant U.S. Attorney Richard Hathaway and Assistant U.S. Attorney Christine Kenney are prosecuting.

Other cases indicted by the grand jury this week include:

Kevin L. Terrell, 47, Topeka, Kan., who is charged with one count of possession with intent to distribute 53 grams of methamphetamine and one count of possession of firearms by an unlawful user of a controlled substance. The crimes are alleged to have occurred Sept. 6, 2005, in Shawnee County, Kan.

If convicted he faces a penalty of not less than 10 years and not more than life in federal prison and a fine up to $4 million on the possession charge, and a maximum penalty of 10 years and a fine up to $250,000 on the firearms charge. The Shawnee County Sheriff’s Office investigated the case. Special Assistant U.S. Attorney Jason Coody is prosecuting.

Michael W. Hines, 36, Topeka, who is charged with one count of possession of a firearm after a felony conviction, and one count of possession of ammunition after a felony conviction. The crimes are alleged to have occurred March 26, 2006, in Shawnee County, Kan.

If convicted, he faces a maximum penalty of 10 years in federal prison and a fine up to $250,000. Alcohol, Tobacco, Firearms and Explosives investigated the case. Special Assistant U.S. Attorney Jason Coody is prosecuting.

Boyd Hatfield, 51, Columbus, Ohio, and Jack R. Rager, Jr., 49, Racine, Ohio, is charged with one count of conspiracy to possess with intent to distribute more than 100 kilograms of marijuana and one count of possession with intent to distribute more than 100 kilograms of marijuana. The crimes are alleged to have occurred May 13, 2006, in Shawnee County, Kan.

If convicted, they face a penalty of not less than 5 years and not more than 40 years in federal prison and a fine up to $2 million. The Drug Enforcement Administration investigated the case. Special Assistant U.S. Attorney David Zabel is prosecuting.

Marcus D. Roberson, is charged with one count of conspiracy to possess with intent do distribute 16.2 grams of crack cocaine, one count of possession with intent to distribute crack cocaine within 1,000 feet of a school, and one count of possession with intent to distribute powder cocaine within 1,000 feet of a school, and one count of possession of marijuana. The crimes are alleged to have been committed Sept. 19, 2005, in Geary County, Kan.

If convicted, he faces a penalty of not less than 5 years and not more than 40 years and a fine up to $2 million on the conspiracy charge, not less than 5 years and not more than 80 years and a fine up to $4 million on the crack cocaine possession case, and not more than 40 years and a fine up to $2 million on the powder cocaine possession case, and up to a year in prison on the misdemeanor marijuana charge. The Junction City Police Department investigated the case. Special Assistant U.S. Attorney David Zabel is prosecuting.

Antonio Munoz-Camacho, who is a citizen of Mexico, and who is charged with one count of unlawfully reentering the United States after being deported, and one count of transporting in a vehicle persons who are unlawfully in the United States. The transportation crime is alleged to have occurred May 3, 2006, in Pratt County, Kan.

If convicted, he faces a maximum penalty of up to 20 years in federal prison without parole and a fine up to $250,000 on the unlawful transportation charge, and up to 2 years in federal prison and a fine up to $250,000 on the reentry charge. Immigration and Customs Enforcement investigated the case. Assistant U.S. Attorney Brent Anderson is prosecuting.

Carlos F. Villalobos-Rivera, who is a citizen of Mexico, and who is charged with one count of unlawfully reentering the United States after being deported, and one count of transporting in a vehicle persons who are unlawfully in the United States. The transportation crime is alleged to have occurred May 3, 2006, in Ellsworth, Kan.

If convicted, he faces a maximum penalty of up to 20 years in federal prison without parole and a fine up to $250,000 on the unlawful transportation charge, and up to 2 years in federal prison and a fine up to $250,000 on the reentry charge. Immigration and Customs Enforcement investigated the case. Assistant U.S. Attorney Brent Anderson is prosecuting.

Alejandro Herrera, 24, who is a citizen of Mexico, and who is charged with one count of using fraudulent documents to be employed in the United States, four counts of aggravated identity theft, one count of causing false wage information to be provided to the Social Security Administration, and two counts of possessing a false Social Security card. According to the indictment, he fraudulently obtained employment at Excel Corp in Dodge City, Kan. The crimes are alleged to have occurred in January and May 2006 in Ford County, Kan.

If convicted, he faces a maximum penalty of 10 years in federal prison without parole and a fine up to $250,000 on the false document charge, a mandatory two years to run consecutively to other sentences and a fine up to $250,000 on each of the identity theft charges, up to 5 years in federal prison without parole and a fine up to $250,000 on the charge of providing false information to the Social Security Administration, and up to 15 years without parole and fine up to $250,000 on each of the charges of possessing a false Social Security card. Immigration and Customs Enforcement investigated the case. Assistant U.S. Attorney Brent Anderson is prosecuting.

Carlos Hernandez-Cabrera, 36, who is a citizen of Mexico, and who is charged with one count of using a false document to be employed in the United States, one count of making a false statement on an I-9 Employment Eligibility Verification charge, one count of misusing a Social Security number, and three counts of aggravated identity theft. The crimes alleged to have occurred April 28, 2006, in Sedgwick County, Kan.

If convicted, he faces a maximum penalty of 15 years in federal prison without parole and a fine up to $250,000 on the false document charge, a maximum penalty of 5 years in prison without parole and a fine up to $250,000 on the charge of making a false statement on an I-9 form and on the charge if misusing a Social Security number; and a mandatory 2 year sentence, consecutive to other sentences, and a fine up to $250,000 on each of the identity theft charges. Immigration and Customs Enforcement investigated the case. Assistant U.S. Attorney Brent Anderson is prosecuting.

Gregorio Barcenas-Arias, 28, who is a citizen of Mexico, and who is charged with one count of unlawfully transporting in a vehicle persons who were in the United States illegally, three counts of possessing and using false documents to be employed in the United States, and three counts of aggravated identity theft. The crimes are alleged to have been committed March 23, 2006, in Saline County, Kan.

If convicted, he faces a maximum penalty of 5 years in federal prison without parole and a fine up to $250,000 on the illegal transportation charge, up to 15 years without parole and a fine up to $250,000 on each of the charges of using or possessing false documents, and a mandatory 2 years consecutive to other penalties and a fine up to $250,000 on each of the identity theft charges. Immigration and Customs Enforcement investigated the case. Assistant U.S. Attorney Brent Anderson is prosecuting.

As in any criminal case, a person is presumed innocent until and unless proven guilty. The indictments filed merely contain allegations of criminal conduct.


SOURCE: United States Attorney Eric Melgren

 
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