North Carolina Man Sentenced for Mortgage Fraud

In a shocking case of mortgage fraud, Kenneth Egri, 55, of Charlotte, was sentenced to 78 months in prison for his role in a mortgage fraud conspiracy that targeted neighborhoods in Union and Mecklenburg counties.

The scheme, which operated from 2001 through 2006, generated over $37.4 million in fraudulent loans and funneled over $5.4 million in fraudulent loan proceeds to Egri and his co-defendant, Dean Huffman, 57, formerly of Charlotte.

According to court documents, Egri and Huffman owned and operated Direct Home Services (DHS) in Charlotte. They would agree with a builder to purchase a property at the ‘true price’ and then arrange for a buyer to purchase the property at an inflated price – usually between $100,000 and $300,000 above the true price.

The buyer would agree to purchase the property in their own name and sign whatever documents were necessary, in exchange for a hidden kickback. The builder would sell the property at the inflated price, the lender would make a mortgage loan on the basis of that inflated price, and the difference between the inflated price and the true price would be extracted at closing by Egri and Huffman.

To induce lenders to make mortgage loans, Egri and Huffman caused fraudulent loan packages to be submitted which included lies and misrepresentations about, among other things, buyers’ income and assets, place of employment, intent to occupy the homes as their primary residence, and true source of cash at closing.

In addition, Egri failed to file income tax returns reporting $1,288,604 of income from the mortgage fraud scheme for the years 2003 through 2006. U.S. District Court Judge Frank D. Whitney ordered Egri to pay restitution to the IRS in the amount of $257,721 and to Bank of America in the amount of $1,335,744.

Egri was also sentenced to two years of supervised release following his prison term. His co-defendant, Dean Huffman, was sentenced to 65 months in prison. Huffman was also ordered to serve two years of supervised release following his prison term.

U.S. Attorney Tompkins stated that the defendants’ actions harmed more than just the affected financial institutions, but also wreaked havoc on neighborhoods by virtue of the foreclosures resulting from their scheme.

Jeannine A. Hammett, Special Agent in Charge of the IRS-CI, stated that individuals who commit mortgage fraud may be prosecuted on several charges, including failure to file income tax returns. The law is clear: people must pay their taxes, and there is no gray area on this issue.

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