(IND) General contractor pleads guilty in $20M mortgage loan scheme

A Philadelphia man pleaded guilty Tuesday to 20 counts in connection with a scheme where he and his co-conspirators inflated purchase prices on mortgage documents for more than 100 city properties resulting in more than $20 million in fraudulent proceeds.

Eric Sijohn Brown, 46, pleaded guilty to conspiracy, two counts of Federal Housing Administration loan fraud, 12 counts of loan fraud, and three counts of tax evasion. A sentencing hearing is scheduled for July 8. Brown faces a maximum possible sentence of 486 years in prison, including a mandatory two year term, five years of supervised release, a fine of up to $15 million, and $2,000 special assessment. A forfeiture notice was also filed seeking more than $13.7 million from all defendants.

Prosecutors said between May 2004 and February 2009, Brown and his co-conspirators inflated purchase prices on loan documents for more than 100 Philadelphia properties resulting in more than $20 million in fraudulent loan proceeds.

The case involves KREW Settlement Services, a Philadelphia real estate settlement company that is alleged to have been at the center of the conspiracy. KREW is an acronym of the first names of Kevin Joseph Franklin, Roderick L. Foxworth, Sr., Eric Sijohn Brown, and Walter Alston Brown, Jr.

Brown was a general contractor who worked with his co-defendants to identify distressed properties to purchase, typically in the West Philadelphia area. Prosecutors said the scheme involved recruiting “straw buyers” whose credit history and personal information was used to purchase the properties, obtain mortgage loans, and take the property's titles, when, in reality, the properties were owned and controlled by the defendants.

Mortgage loan applications were then prepared in the names of the straw buyers containing a host of false information, including false purchase prices, false employment and income information, and false statements about the straw buyers living in the properties. Mortgage brokers — including Foxworth, Walter Brown, and John William Polosky (charged separately in the Western District of Pennsylvania) — allegedly submitted the fraudulent loan applications to lenders to secure the loans for the buyers, knowing that the information was false.

Also charged in connection with the scheme were:

    Cynthia Evette Brown, who is alleged to have falsely verified that many of the straw buyers worked for her employer, Unicco Service Company, when they did not.

    Kevin Joseph Franklin, a title agent, is alleged to have falsely prepared two deeds and settlement statements – one for the seller that showed the actual agreed-upon purchase price and a false one for the lender that showed the grossly inflated purchase price. Franklin is also alleged to have created false title insurance policies for the lenders.

After the loans funded, prosecutors said the seller was paid the agreed-upon purchase price, and the difference between the actual price and the false price quoted to the lender was shared with and distributed by Franklin to Eric Brown, Foxworth, Walter Brown, and Cynthia Brown.

In addition to the five defendants charged with Brown, and the three defendants charged by the Western District of Pennsylvania, seven defendants were charged by information.

Source: Philadelphia Business Journal

(IND) Construction firms worried about worker shortage

DENVER (AP) — The construction industry says it's in danger of running short on workers to keep up with the demand for building projects, as employees age and more teens are pushed to go to college. To counter the effect, a top construction trade group kicked off an effort Tuesday to help bolster the employment ranks.

The plan by the Associated General Contractors of America, which represents 30,000 companies, aims to draw more people into building trades by establishing charter schools focused on technical training, starting non-union apprenticeship programs and pushing for immigration reform.

The employment concern comes despite the fact that more than 2 million construction workers were laid off during the recession. The group believes many of the laid-off workers have since found work in other fields or have retired.

Meanwhile, about 44 percent of the construction workforce is age 45 or older and nearly one of every five construction workers is 55 or older, according to U.S. Census Bureau statistics.

On immigration reform, the group wants protections for immigrants already in the country and higher caps on the number foreign workers temporarily allowed into the country to work on construction projects.

"Unless there is action soon on these fronts, the construction industry in Colorado and across the country will face worker shortages with increasing frequency," Ken Simonson, the association's chief economist, said over hammering and the whirring of a drill at Denver's Union Station.

"These shortages have the potential to undermine broader economic growth by needlessly delaying and inflating the cost of construction and development," he said.

The station in the city's trendy lower downtown neighborhood is being renovated and a hotel and shops are being added along with commuter rail and bus service.

The group picked Denver for the announcement because it has been one of the top 10 metro areas for construction hiring in the past year. Simonson said Colorado's oil and gas industry is one of the main customers for new construction, but added that the industry is also competing for the same workers as builders.

Two union electricians working on a train platform said they saw the need for more training for future workers, noting that people been brought in from Nebraska and Oregon to finish the construction project. However, they said training programs offered by their union, the United Brotherhood of Electrical Workers, worked well and paid workers as they trained.

Electrician Shawna Smith said she worked as a teller for a credit union before deciding she'd rather work outside with her hands. She said she was surprised to work with new apprentices who didn't even know how to use a power drill or a ratchet set.

Source: Houston Chronicle