Three people have been sentenced to prison for their roles in a mortgage fraud scheme in Indiana, and 10 more await sentencing after entering guilty pleas or being convicted at trial.

An Indianapolis, Ind., mortgage broker who pleaded guilty to participating in the multimillion-dollar fraud scheme was sentenced Tuesday to seven years in prison and ordered to make $3.4 million in restitution payments.

Kenneth McKinney, 40, president of American Savings Mortgage, admitted to participating in a scheme that allegedly used inflated appraisals, falsified loan applications and kickbacks to participants. The co-manager of American Savings Mortgage, Pamela Martinez, is also a defendant in the case.

Prosecutors said American Savings Mortgage obtained financing for residential properties in Indiana cities including Indianapolis, Marion, Fairmount, Kokomo and Anderson. Altogether, the scheme generated 99 fraudulent loans, resulting in losses of $3.4 million, prosecutors said.

Patricia Wilcox-McClung, a Kokomo, Ind., woman accused of recruiting buyers for the scheme and providing false documentation on borrowers’ income, was sentenced to 37 months in prison Monday and ordered to pay $1.49 million in restitution.

McKinney, Wilcox-McClung and another defendant, Doris Walker Jones, pleaded guilty to conspiracy to commit wire fraud and money laundering charges. Walker Jones was sentenced to 21 months in prison last week.

Ten other people who have entered guilty pleas or been convicted at trial await sentencing in the case, the U.S. Attorney for the Southern District of Indiana said today in a press release.

McKinney’s alleged role in the scheme was to bring together buyers and sellers who paid inflated prices for properties based on inflated appraisals he obtained. Two sellers, Joseph Britton and Mark Speckman, were convicted for their role in the scheme on Sept. 22 after a two-week trial. Appraiser James Spicer has pleaded guilty in the case and awaits sentencing

Lenders included First Bank Inc. of Louisville, Ky., which would wire funds to Anchor Title in Anderson, where the transactions would close. McKinney and other co-conspirators allegedly received checks from the excess loan proceeds.

In one instance in July 2002, Britton and Speckman sold 28 properties in Indianapolis to Richard Pollett and co-defendant James McClung. The transactions generated more than $1.3 million dollars in fraudulently obtained loan proceeds, which were disbursed to three companies controlled by Britton and Speckman: Aspen Group, Pacific Group, and Home Source Investments.

Prosecutors said Britton and Speckman then wrote 29 checks totaling approximately $430,000 to Senicure Investment Group to fund kickbacks to the other participants in the scheme. The Senicure account was used to hide the source of these funds, with McKinney writing himself a check for $71,000 in that transaction.

Show Comments Hide Comments

Comments

Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
The best of real estate is gathering in Las Vegas NEXT month! Grab your ticket before prices go up on October 1.Register Now×
Limited time: Get 30 days of Inman Select for $5.SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription