A former Indianapolis police officer who moonlighted as an appraiser was sentenced to 57 months in federal prison Wednesday and ordered to pay $1.1 million in restitution after he was convicted of conspiracy, money laundering and wire fraud charges related to inflated mortgage loans.
Michael C. Smith, 45, who was fired from the police department after a jury convicted him in September, was one of three people sentenced this week in two mortgage fraud schemes in which 15 people have been sentenced to federal prison.
The schemes involved mortgage brokerages Quantum Investments and American Savings Mortgage, which used inflated appraisals to obtain loans on properties in excess of their true value, prosecutors said.
Prosecutors have said American Savings Mortgage obtained financing for residential properties in Indiana cities including Indianapolis, Marion, Fairmount, Kokomo and Anderson, generating 99 fraudulent loans that resulted in losses of $3.4 million.
Kenneth McKinney, 40, president of American Savings Mortgage, was sentenced in October to seven years in prison and ordered to make $3.4 million in restitution payments after pleading guilty to participating in the scheme.
The two other defendants sentenced this week, Joseph Britton, 47, of Fishers, and Mark Speckman, 48, of McCordsville, allegedly controlled three companies used to disburse fraudulently obtained loan proceeds — Aspen Group, Pacific Group, and Home Source Investment LLC. The two bought properties in the names of the businesses that were sold at approximately twice their true value, prosecutors said.
Britton and Speckman were sentenced Tuesday to 33 months in prison, and ordered to pay restitution of approximately $900,000 for their roles in providing properties for sale through American Savings Mortgage and then paying kickbacks to others in the scheme.
Susan W. Brooks, United States attorney for the Southern District of Indiana, said companies owned by Britton and Speckman had been cited by the city more than 450 times for health and safety violations on their investment properties.