$100M Mortgage Fraud: Whoolery Found Guilty

PITTSBURGH – Lewis Whoolery, 44, formerly of Port Vue, Pa., and currently residing in Delray Beach, Fla., is facing up to 20 years in prison after a federal jury convicted him of wire fraud conspiracy today. The verdict follows a three-hour deliberation and concludes a case built around a staggering $100 million mortgage fraud scheme, the largest of its kind to ever go to trial in the Western District of Pennsylvania.

According to prosecutors, Whoolery operated First Capital Home Equity, a mortgage broker business used as a hub for systematic deception. The scheme began to unfold in 2003 when Whoolery brought in Kenneth Cowden, an unlicensed appraiser, to create fraudulent property appraisals. Over the next two years, Cowden allegedly fabricated over $67 million in appraisals, inflating property values and even swapping out photos to present a false image of the collateral. The appraisals weren’t just inaccurate; they falsely claimed a licensed appraiser had prepared them, adding a layer of criminal misrepresentation.

The conspiracy deepened with the recruitment of Jeannette Gray, a licensed appraiser from the Philadelphia area, and Whoolery’s sister, Kimberly Baldwin. Gray agreed to allow Baldwin to prepare appraisals under her name for a monthly payment of $4,000. Baldwin continued the pattern of inflated values and photo manipulation. When Gray backed out in 2004, Whoolery found another willing participant: Jason Sheraw, a licensed appraiser from Irwin, Pa., who also accepted $4,000 a month to have Baldwin prepare fraudulent appraisals under his license. Between 2003 and 2007, Baldwin churned out hundreds of these falsified appraisals, fueling millions in fraudulent loan applications.

Whoolery didn’t stop at the appraisals. He oversaw loan officers – including Lawrence Kraynak, Daniel O’Connor, Mark Hipsley, John Polosky, Daniel Gillen, Shawn Cupp, and Elizabeth Drake – who submitted loan applications based on the fraudulent appraisals. These submissions routinely misrepresented borrowers’ financial situations, exaggerating income and assets with forged pay stubs and bank statements. The government alleges this wasn’t simply about inflated property values; it was a complete fabrication of borrowers’ ability to repay the loans.

This wasn’t a victimless crime. The $100 million in fraudulent loans represents a massive drain on the financial system, with ripple effects felt throughout the economy. Significantly, Cowden, Kraynak, O’Connor, Hipsley, Polosky, Gillen, Cupp, Drake, Gray, Sheraw, and Baldwin have all already been convicted of mortgage fraud related offenses, indicating a widespread pattern of criminal behavior. Assistant United States Attorney Brendan T. Conway prosecuted the case, bringing it to a close after years of investigation by the Mortgage Fraud Task Force.

Whoolery now awaits sentencing, where he faces a maximum penalty of 20 years imprisonment and a $250,000 fine. The final sentence will be determined by the Federal Sentencing Guidelines, taking into account the severity of the offense and any prior criminal history. The Grimy Times will continue to follow this case as sentencing approaches.