Two central Illinois men were sentenced last week to 20 months in federal prison for defrauding banks and mortgage companies of more than $1 million in a mortgage fraud scheme, officials said.

U.S. District Judge Richard Mills sentenced Randolph McAfee, age 38 of Springfield, Ill., and Darrin Shipley, age 38 of Peoria, Ill., to 20 months in prison and ordered that the defendants pay restitution in the total amount of $1,125,446 to four banks and mortgage lending companies the two defrauded in the late 1990s.

Judge Mills allowed McAfee and Shipley to self-report to a federal prison facility at a date to be determined by the Bureau of Prisons.

McAfee and Shipley pled guilty in December 2004 to a single count of bank fraud related to the sale of approximately 100 properties in 1997 and 1998, officials said. During the plea hearing, the two admitted that they advertised that individuals could purchase properties with “no down payment” or “no money down” through their business, Central Illinois Real Estate Inc.

McAfee and Shipley admitted that they often contracted to sell properties at inflated prices to increase the amount of mortgage loans their customers could obtain. While certifying to the mortgage companies that they received down payments from the buyers, they in fact received no down payments and accepted only the mortgage loan proceeds as payment in full.

McAfee and Shipley admitted that they assisted buyers in completing and submitting loan applications that often contained false information, including falsely inflated figures for borrowers’ bank account balances. When lenders requested verification of the balances, McAfee and Shipley prepared false Verification of Deposits to reflect higher balances in the borrowers’ accounts than they actually had.

The charge is the result of an FBI investigation. The case was prosecuted by Assistant U.S. Attorney Joseph H. Hartzler.

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