FOUR INDICTED IN MORTGAGE FRAUD SCHEME WHICH GROSSED MILLIONS

(HOUSTON, Texas) – A nine-count indictment charging four individuals with participating in a mortgage fraud scheme in the Houston, Texas, area over a four-year-period which allegedly grossed millions has been unsealed, United States Don DeGabrielle announced today.  The indictment is the result of a joint investigation being conducted by agents of the FBI and the U.S. Housing and Urban Development Office of Inspector General (HUD-OIG).

Carlos Paul Gonzalez and Ken Russell Browder, who together operated several Houston area businesses including Advantage C&R Funding Group and First Advantage Funding Group, and Jannice Bonner and Machell Halstead, two Escrow officers involved in the closing of residential real estate transactions at various Houston area title companies, are accused of conspiracy to commit wire and mail fraud and multiple substantive counts of wire fraud.

The indictment was unsealed Monday, March 3, 2008, following the arrest of Gonzalez, Browder and Halstead by investigating agents in Houston. A warrant remains outstanding for the arrest of Bonner. Browder appeared before U.S. Magistrate Calvin Botley on Monday and was ordered released on bond. Gonzales and Halstead appeared before Judge Botley Tuesday, March 4, 2008, and have also been ordered released upon posting bond pending trial of the case.

The scheme alleged in this indictment involved numerous purchases of residential properties throughout the Houston and surrounding area through alleged misrepresentations and false pretenses made to various mortgage lenders concerning the borrower’s ability and incentive to repay the mortgage loans. The scheme, which allegedly was in operation between January 2002 through November 2005, is alleged to have generated fraudulently-induced loans in an amount exceeding $15 million. 

According to the indictment, Carlos Paul Gonzalez and Ken Russell Browder worked at a Houston branch of a Mortgage Broker’s Office. Jannice Bonner and Machell Halstead worked at various title companies in Houston as Escrow Officers closing residential transactions. Gonzalez and Browder are accused of recruiting individuals to act as borrowers and apply for mortgage loans to purchase these properties. Operating under various business names, the indictment alleges Gonzalez and Browder arranged for the purchase of the properties and would then receive proceeds from the fraudulently-induced loans into bank accounts held in the names of these businesses from the closing transactions held at the title companies. Bonner and Halstead are accused of preparing and disseminating closing documents used to close these real estate transactions and fund the loans and then disbursing the loan proceeds through the Escrow Accounts of the title companies.  

Upon conviction, each of the nine counts carries a maximum penalty of 20 years in a federal prison and a $250,000 fine. This case will be prosecuted by Assistant United States Attorney Melissa Annis.

An indictment is a formal accusation of criminal conduct, not evidence. A defendant is presumed innocent unless and until convicted through due process of law.