A federal jury on Tuesday convicted former North Miami Mayor Marie Lucie Tondreau for her alleged involvement in an $8 million mortgage fraud scheme.
According to the FBI, Tondreau, along with three other individuals, orchestrated an elaborate scheme to defraud lenders, including the U.S. Department of Housing and Urban Development (HUD).
Specifically, the FBI alleges that between December 2005 and May 2008, Tondreau, 54, and Karl Oreste, 56, of Miramar, Fla., president of KMC Mortgage Corp., hosted several Haitian radio shows that they used to recruit straw buyers who posed as borrowers to purchase properties identified by Oreste.
Some of these straw buyers were listeners responding to an advertisement by KMC Mortgage Corp. that was aired during the programs, authorities allege in their indictment. The co-conspirators, in turn, paid some of the listeners to help them carry out the fraud scheme.
In addition, Kelly Augustin, 57, of North Miami, an employee of KMC Mortgage, also recruited straw borrowers, the FBI alleges.
After the straw buyers were recruited, Oreste and Okechukwu Josiah Odunna, a.k.a ‘O.J. Odunna,’ 49, of Lauderdale Lakes, Fla., and other co-conspirators prepared or caused to be prepared loan applications on behalf of straw borrowers, the FBI alleges. Odunna was an attorney previously licensed to practice law in Florida and was president of O.J. Odunna PA and Direct Title and Escrow Services.
The loan applications included false information relating to employment, wages, assets, and intent to make the property being purchased a primary residence, according to the indictment.
The loan applications and documents were submitted to various mortgage lenders throughout the U.S., and, once approved, the lenders wired loan funds to O.J. Odunna PA, Direct Title or other title companies for closing.
Authorities allege that in some instances, Oreste, Odunna and other co-conspirators created and submitted duplicate HUD-1 Settlement Statement Forms, which grossly inflated the true purchase price of the properties. The HUD-1 statements also falsely and fraudulently represented to the mortgage lenders that the straw borrowers had met their down payment and cash to close obligations, when, in fact, the straw borrowers had never made any such payments.
At closing, a portion of loan proceeds were disbursed to Oreste through his corporation, JR Investment and Mortgage Corp., or other bank accounts controlled by him. In some instances, a portion of the loan proceeds was diverted to O.J. Odunna PA or Direct Title accounts.
Oreste disbursed some of the proceeds he received to pay recruiters – including Tondreau and Augustin – and straw borrowers, authorities allege. Oreste also transferred a substantial portion of the funds to bank accounts of LTO Investment Corp., a corporation controlled by Tondreau. Tondreau used funds deposited in LTO Investment Corp.'s bank accounts to make payments on the falsely and fraudulently obtained mortgages in order to maintain the loans and to conceal and further the fraud. She also used a portion of the funds deposited into LTO Investment Corp.'s bank accounts for her own personal use and benefit, authorities allege.
During the trial, prosecutors showed that Tondreau was involved in obtaining 13 fraudulent loans, for which the lenders have suffered about $8 million in losses. Tondreau received in excess of $300,000 into a business account controlled by her, and in excess of $100,000 into her personal bank accounts, prosecutors alleged.
‘Today's conviction against Marie Lucie Tondreau is a success in our continuing efforts to fight mortgage fraud that jeopardizes our nation's financial institutions,’ says U.S. Attorney Wifredo A. Ferrer, in a statement. ‘Tondreau abused her prominence in the community to perpetrate the $8 million mortgage fraud scheme, which thanks to the efforts of my office's prosecutors and federal and state law enforcement we successfully unraveled.’
Tondreau is scheduled for sentencing on March 20. She faces a maximum term of 30 years in prison.
Oreste previously pled guilty to conspiracy to commit wire fraud and is scheduled for sentencing on Jan. 12, 2015.