August 31, 11

NEWS / Mortgage Fraud Scheme Lands Midwest City Man in Prison for 40 Months

OKLAHOMA CITY—Yesterday, DERRICK REUBEN SMITH, 47, of Midwest City, was sentenced by United States District Judge Timothy D. DeGiusti to serve 40 months in federal prison for his role in a conspiracy to commit wire fraud in connection with mortgage loans, announced Sanford C. Coats, United States Attorney for the Western District of Oklahoma. In addition, Judge DeGiusti ordered that Smith serve two years of supervised release following his imprisonment and pay restitution of $369,355.54.

Mr. Smith was convicted after a jury trial in April. The evidence showed that he recruited two individuals to buy two new homes in the Raintree Acres Addition in Edmond in mid-2006 and early 2007. The homes sold for $425,000 and $435,000. The builder of both homes—Dodson Custom Homes, LLC—agreed that T&T Realty, a real estate brokerage operated by Trina Tahir, would receive large commissions and bonuses totaling $51,950 and $77,950. After the closings, T&T Realty wrote checks to Michael Gipson, an agent at T&T Realty, for $27,059.86 and $58,000. Gipson then wrote checks in those same amounts to “MP Service,” a business that Smith operated. In short, Smith induced lenders to fund mortgages based on inflated real estate prices and misrepresented the distribution of excessive loan proceeds to himself as commissions and bonuses paid to T&T Realty. The houses ultimately went into foreclosure. Each sold for over $100,000 less than the inflated loans that Smith had the buyers receive.

At the sentencing hearing yesterday, Judge DeGiusti heard evidence concerning a third house in the Raintree Acres Addition that was part of Mr. Smith’s scheme. The evidence showed that Dodson Custom Homes sold this property to Mr. Smith’s wife for $465,000. Mr. Dodson then rented the house from MP Service, Mr. Smith’s company, for approximately $5,000 per month. After the house went into foreclosure, it sold for only $330,000.

Smith’s two co-defendants entered guilty pleas before trial. On March 30, 2011, Michael Gipson pled guilty to conspiracy and money laundering related to the Raintree Acres properties that were at issue in Smith’s trial. On April 6, 2011, Trina Tahir pled guilty to money laundering in connection with a property that Gipson purchased in May of 2006. Tahir and Gipson will be sentenced in the coming weeks for their participation in this scheme. Each faces a maximum punishment of 20 years in prison and a fine of $500,000, in addition to restitution and forfeiture.

This sentence is the result of an investigation conducted by the Criminal Investigation Division of the Internal Revenue Service and the Federal Bureau of Investigation. The case is being prosecuted by Assistant U.S. Attorneys Scott E. Williams and Chris M. Stephens.

Reference is made to public filings for further information.

http://www.fbi.gov/oklahomacity/press-releases/2011/mortgage-fraud-scheme-lands-midwest-city-man-in-prison-for-40-months

Tags: criminal investigation,