Two Eastern Jackson County Men Plead Guilty in $23 Million Mortgage Fraud Scheme

Involved Hundreds of Properties

April 23, 2010 - KANSAS CITY, MO—Beth Phillips, United States Attorney for the Western District of Missouri, announced that a Lee’s Summit, Missouri man and a Grain Valley, Missouri man pleaded guilty in federal court today to charges related to a $23 million mortgage fraud scheme that involved 350 residential properties, including inner-city properties.

“This is among the largest mortgage fraud schemes ever prosecuted in the Western District of Missouri,” Phillips said. “As in so many fraud cases, the culprits thought they were getting away with their crime for awhile; but inevitably, their scheme collapsed and left a paper trail that federal agents diligently followed.

“This should be a warning to anyone who might consider exploiting a financial crisis for personal gain,” Phillips added. “Short-term profit isn’t worth the certainty of prosecution, punishment and prison.”

Nathan N. Anderson, 32, of Grain Valley, and Kyle J. Wine, 29, of Lee’s Summit, each waived his right to a grand jury and pleaded guilty before U.S. District Judge Gary A. Fenner this morning to a two-count federal information that charges both men with participating in a conspiracy to transport money obtained by fraud across state lines and with money laundering. Kyle Wine is the brother of Jeffrey Tyler Wine of Kansas City, who pleaded guilty to a related mortgage fraud scheme and was sentenced in May 2007 to five years in federal prison without parole.

Anderson and Kyle Wine admitted that, from February 2002 to November 2005, they defrauded mortgage lenders by inducing them to loan investors a total of $23,324,114 to purchase 350 residential properties. Anderson was involved with 264 properties totaling $18,918,542; Kyle Wine was involved with 86 properties totaling $4,405,572.

Anderson and Wine were in the business of purchasing, rehabilitating, managing and selling residential properties in the metropolitan area. Both Anderson and Kyle Wine worked at Sunrise Equities, Inc., which was operated by Jeffrey Wine. Anderson left to work as co-owner of AMIC and Real Estate Holdings, Inc., at which point Kyle Wine began working at Sunrise Equities and took over Anderson’s duties. Kyle Wine likewise worked with AMIC, and he also did business as Rockhill Realty LLC, selling residential real estate.

Anderson and Kyle Wine acquired residential properties at reduced rates. After rehabbing the properties (at times, they admitted, doing poor quality work), they were advertised for sale as investment properties with no money down. Anderson and Kyle Wine told investors that they would provide the down payment and closing costs for the sale, secure renters for the property and ensure that mortgage payments were paid even if the properties were not rented. Anderson and Wine guaranteed a positive cash flow from the properties.

Anderson and Wine, along with their co-conspirators, prepared false and fraudulent loan applications and supporting documents to submit to mortgage lenders in the names of investors.

Anderson and Kyle Wine, along with their co-conspirators, managed the rental properties for the investors for one year after purchase. During that time, they submitted false monthly reports to investors of rent received, expenses incurred, and income earned, and paid to the investors the amount of income reflected. This induced victim-investors to purchase additional properties.

Under federal statutes, Anderson and Kyle Wine are each subject to a sentence of up to 15 years in federal prison without parole, plus a fine up to $500,000. Sentencing hearings will be scheduled after the completion of presentence investigations by the United States Probation Office. This case is being prosecuted by Assistant U.S. Attorney Linda Marshall. It was investigated by IRS-Criminal Investigation, the U.S. Department of Housing and Urban Development – Office of Inspector General, and the Federal Bureau of Investigation.