Friday, August 16, 2013

4 Indicted in $158 mil Manufactured Housing Mortgage Fraud Scheme

A Burlington, NC man faces federal charges of mortgage fraud and impeding a federal investigation and is now considered a fugitive, the U.S. Department of Justice says.

Four managers with Phoenix Housing Group, headquartered in Greensboro,NC were indicted Aug. 6 on accusations that they conspired to defraud buyers of manufactured and modular housing and originated $158 million in fraudulent federally secured loans for their purchase.

The scheme sold more than 1,100 homes to North Carolina consumers in Burlington, Asheboro and elsewhere, resulting in mortgage insurance claims totaling more than $24 million and losses to the U.S. exceeding $16 million, a release from U.S. Attorney Anne Tompkins's office said. Tompkins prosecutes federal cases in the Western District of North Carolina.

Fabian Sparrow, 35, of Burlington, was indicted Tuesday on one count of conspiracy to make false statements to the U.S. Departments of Housing and Urban Development and Agriculture and one count of aiding and abetting the destruction of documents with intent to impede a federal investigation.

According to the release, Sparrow was a sales manager at the company's Burlington office, doing business as Southern Showcase Housing at 778 S. Graham-Hopedale Road.

"An arrest warrant has been issued for Sparrow, who is currently believed to be a fugitive," the release said.

A superseding indictment filed Aug. 6 says that Sparrow; Dennis Wayne Parris, 55, of Pinehurst; Andrew B. McKeown, 38, of Asheboro; and Roger Dean Bailey Jr., of Hickory, were employed by Phoenix Housing Group, a manufactured home retailer, between April 2005 and October 2010. Parris was a senior vice president. Sparrow, McKeown and Bailey were sales managers in Burlington, Asheboro and Granite Falls.

A longtime Charlotte loan officer pleaded guilty Tuesday to taking part in a mortgage-fraud ring that rigged more than $158 million in home loans across the Carolinas, resulting in millions of losses to federal loan programs.

Joseph “Joey” Klakulak approved more than a third of the loans, the U.S. Attorney’s Office says. He pleaded guilty to one count of conspiracy to defraud the United States and making false statements to federal investigators.

Klakulak, 37, faces up to five years in prison and a $250,000 fine. He was one of three loan officers accused of participating in the six-year scheme.

Because the loans were federally insured, even if the buyer defaulted, the loan company involved got paid. Klakulak and two other loan officers at the company charged in the case approved mortgage applications even though they knew they had been rigged, investigators say.

PHG’s sales pitch for houses and land used claims of nonexistent “rent to buy” programs or down payments as low as $500.

According to the indictment, company personnel, with the help of Klakulak and the other loan officers, regularly manipulated their customers’ credit reports so they would qualify.

In some cases, the sales staff persuaded customers to sign promissory notes, which they then used to force buyers to sign mortgages much higher than promised. When customers made down payments or put up earnest money, PHG personnel often pocketed them as profit, prosecutors say.

By MICHAEL D. ABERNETHY Times-News - McClatchy-Tribune Information Services


Ibgreen said...

Prosecute to the full extent of the law!

Anonymous said...

They need to look into Clayton Homes and Vanderbuilt Mortgage also.

Anonymous said...

These guys should be thrown in jail for the rest of their lives. They are scum.

Anonymous said...

Keep in mind these people came out of the mobile home business which are HUD (federal) code "house trailers". Honest modular home builders who are governed by state, county, and local building codes (just like stick builders) do not get caught up in these deceitful tactics. Many of the building code modulars are loaned on by hometown banks. If your house gets to you with a permanent metal frame, even though it looks like a cute house, is a HUD code structure. If it arrives on a frame that is removed and has a wood joist floor system and is set on the foundation by a crane, then you have a modular that falls under building inspections department jurisdictions. HUD code dealers have been rife with shenanigans for years.

Anonymous said...

I purchased my supposed new modular ended up used oakwood doublewide smaller cause ground did not "perk" there between 1999 and 2000. My lot paid in full,almost 8,000 down,9% INTEREST PAID over $100,000 till Vanderbilt mortgage broke in and changed locks. Went to bankruptcy. Attorney said walk as home not worth interest,floors rotted,etc. No where near stick built dollar comparison value and fake brick underpinning home sits on cement blocks.First time ever bankruptcy in almost 40 years.NC attorney general did not help.Owned by Citi/Chase Bank Berkshire J.B. Greene attorney threatened in person by Vanderbilt man named Brian and telemarketers.Land from Sellars Inc---Homequest value paid and made homeless resold to Vanderbilt for $20,000. Same story in Neighborhood most owe over 300,000.

Anonymous said...

Any update on sparrows as a fugitive?

Anonymous said...

These trailer people get what they deserve because instead of taking pride in selling homes to people they just sell houses to customers Alot of these modular homes retail places sell modulars homes like trailer salesmen and buyers had better beware!

These retailers are terrified of people who can sell homes out of the back of their pickup WHO ARE HONEST! It doesnt take alot to sell a family a home if your honest and upfront and stay OUT of the black areas

Salespeople come in all shapes and sizes, those of us who really enjoy people and have ethics concerning putting people in what is not only affordable but well built will remain in this business because we dont need a fancy sales center with lots of overhead to sell homes by "any means necessary" and thats what the smart shopper had best be looking for.

Someone who knows

Anonymous said...

Hate to be the guy whose wife talked him in to signing with the trailer guys for a doublewide vs. the pickup truck mod dealer who matched their price with a blue nailed home built to Florida Hurricane Stds.

Anonymous said...

Joey Klakulak is innocent and did not know that the loans he approved were false. He is a great man, father, and husband. He does not deserve this.

Jason Knight said...

The guy listed Andrew Brian McKeown just sold us a modular home in Burlington NC and has defrauded us in many ways. He lied about the type of house, the house is built Wrong and no one will take responsibility for their mistakes and or crimes.

How is this man still selling home in Burlington NC??? Or anywhere for that matter?? Do they not get barred from selling ??? We should have been protected against this man.

Michael Homebuilder said...

He also did several similar things to us as we were attempting to build. Luckily we got a lawyer and got out of the contract but lost money in the process.

In 2018 he was voted the top seller of modular homes in NC. So he and the company and being rewarded after all of this.