Monday, June 18, 2012

Final Two Defendants in Mortgage Fraud Scheme Sentenced

Former East Grand Rapids Businessman Kevin Grady, Sr. Sentenced to 14 Years’ Imprisonment

GRAND RAPIDS, MI—The last two participants in a multi-million-dollar mortgage loan fraud scheme were sentenced in U.S. District Court today, announced U.S. Attorney Donald A. Davis. Kevin Grady, Sr., 48, of Grand Rapids, Michigan, was sentenced by the Hon. Robert J. Jonker to serve 14 years in prison for his convictions for wire fraud, bank fraud, and making false statements to the FBI. Edward Hessie Sumrell, 55, of Grand Rapids, Michigan, was sentenced to serve three years’ probation for making a false statement to the FBI. Seven other individuals, including a convicted licensed appraiser and a convicted closing agent, testified for the government at the trial of Grady and Sumrell in February of this year. Both were previously sentenced for their roles in conjunction with the same mortgage fraud scheme.

During 2005 and 2006, Grady managed the Grand Rapids office of Sure Financial, a mortgage brokerage business owned and licensed by another individual. The government proved at trial that Grady, and loan officers working at his direction, obtained inflated appraisals and fixed prices with sellers. Grady enticed financially unqualified buyers to purchase the homes by promising them kickbacks of $5,000 to $10,000 per property after the closings. Grady defrauded the mortgage lenders by submitting loan applications that misrepresented the buyers’ places of employment, employment income, assets, and other pertinent information. Grady and his loan officers created or obtained false paystubs, residential leases, tax documents, verifications of employment, and other documentation that was submitted to the lenders to make it appear that the information on the loan applications was truthful. Some of these counterfeit documents were prepared and provided by Sumrell, who was convicted by the jury of lying to the Federal Bureau of Investigation regarding his association with Grady’s office. Judge Jonker stated that Grady’s significant sentence was attributable not only to his blatant and pervasive pattern of fraud, but also to his abusive behavior directed at individuals that he needed to carry out the fraud and who were vulnerable to his intimidation.

Evidence submitted at trial proved that, in less than one year, Grady defrauded mortgage lenders in excess of two million dollars and personally pocketed over $500,000 of the fraudulently obtained loan proceeds, some of which was then used to pay kickbacks to the buyers. Grady also defrauded Key Bank in conjunction with a million-dollar loan that he used to pay off the building on East Paris Avenue where he operated the fraudulent mortgage loan business and Grady Group Properties. Judge Jonker ordered Grady to pay $3,000,000 in restitution to the lending institutions, and he agreed to forfeiture in the amount of $1,181,332. “Mortgage fraud will continue to be vigorously investigated and prosecuted by this office. Pervasive mortgage fraud schemes do not just victimize the mortgage lenders, they victimize our entire community by manipulating the true value of real estate through falsely inflated appraisals, followed by inevitable foreclosure sales at below-market values,” said U.S. Attorney Davis.

The Grand Rapids Resident Agency of the FBI investigated the case.

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