Jim C. Hodge and the entities formerly known as Allied Home Mortgage Capital Corporation and Allied Home Mortgage Corporation were found liable by a federal jury in Houston for a sprawling, more than ten-year mortgage fraud scheme that defrauded the Federal Housing Administration’s insurance program of tens of millions. After a five-week trial, the jury returned verdicts late yesterday holding Hodge, the former president and CEO, and his companies accountable under the False Claims Act and FIRREA, exposing a calculated effort to bypass federal oversight and profit from ghost operations.
The jury awarded the United States $92,982,775 in damages, with $7,370,132 assessed directly against Jim C. Hodge. Under the False Claims Act, those damages are subject to trebling, potentially tripling the financial liability. Additionally, the court must impose mandatory penalties of $5,500 to $11,000 for each individual violation, with FIRREA violations carrying further fines. U.S. District Judge George C. Hanks Jr., who presided over the trial, will determine the final penalties at a later hearing.
As a HUD-approved loan correspondent, Allied Capital was required to obtain federal approval for every branch originating FHA-insured loans. Instead, with Hodge’s explicit approval, the company operated over 100 unregistered ‘shadow’ branch offices nationwide—none of which were authorized by HUD. These branches pumped out FHA-backed loans while flying under federal radar, their risky originations hidden through a web of falsified documentation and stolen ID numbers from legitimate branches.
“For years, Hodge and Allied repeatedly lied to HUD in order to fraudulently reap profits from the FHA mortgage insurance program,” said U.S. Attorney Preet Bharara of the Southern District of New York. “After a month-long public trial where all their misconduct was exposed, a jury has held Hodge and Allied responsible for their lies and has made them pay for losses the United States suffered.” The fraud directly undermined HUD’s ability to assess default risk, threatening the integrity of a program designed to make homeownership accessible to low- and moderate-income families.
U.S. Attorney Kenneth Magidson of the Southern District of Texas praised the joint investigation, calling it a ‘tremendous win for the government.’ ‘Working together, we ensured a successful outcome following a lengthy trial and investigation against Allied and its CEO. We will continue to apply our resources whenever and wherever we can to ensure those that perpetuate such egregious fraud against the United States are held accountable for their actions.’
‘This should serve as a notice to all those determined to engage in illegal schemes such as these that they are not beyond the reach of the federal law enforcement community,’ said HUD Inspector General David A. Montoya. With FHA insurance shielding lenders from default, the stakes are high—so is the consequence when companies like Allied and individuals like Jim C. Hodge rig the system for profit.
Related Federal Cases
- Jim C. Hodge, Allied Home Mortgage Liable for $92M FHA Fraud · Texas
- Robert Morgan Indicted in $500M Mortgage Fraud Scheme · Pennsylvania
- Carlos Djemal, 52, Charged in $100M VAT Fraud Scheme · Illinois
- Buffalo Man Sentenced for $360K Wire Fraud, Tax Evasion · Texas
- Lancaster Man Pleads Guilty to $5M Wire Fraud Scheme · Delaware
Key Facts
- State: Texas
- Agency: DOJ USAO
- Category: Fraud & Financial Crimes
- Source: Official Source ↗
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