LaFrances Dudley O’Neal, Mortgage Fraud, Maryland 2013

A Maryland woman has been sentenced to 48 months in prison for her part in a mortgage fraud scheme that cost lenders more than $900,000.

LaFrances Dudley O’Neal, 49, of Clinton, Md., was sentenced today to 48 months in prison for her part in a mortgage fraud scheme that cost lenders more than $900,000. She was ordered to begin serving her sentence immediately.

The sentence was announced by U.S. Attorney Ronald C. Machen Jr., Gary R. Barksdale, Inspector in Charge, Washington Division, U.S. Postal Inspection Service; Cary Rubenstein, Special Agent in Charge of the Mid-Atlantic Region of the Office of Inspector General of the U.S. Department of Housing and Urban Development; Valerie Parlave, Assistant Director in Charge of the FBI’s Washington Field Office, and William P. White, Commissioner of the District of Columbia Department of Insurance, Securities and Banking.

O’Neal was found guilty by the jury on March 27, 2013 of four felony charges, including conspiracy and bank fraud, after a two-week trial in the U.S. District Court for the District of Columbia. She was sentenced by the Honorable Reggie B. Walton. Judge Walton also ordered her to pay $964,503 in restitution and the same amount in a money judgment of forfeiture. In addition, he ordered 60 months of supervised release following the prison term.

According to the government’s evidence at trial, from June 2006 to August 2009, O’Neal and others identified District of Columbia area homes and straw buyers to obtain mortgages through false loan applications, forged documents, and fraudulent settlements. Co-conspirators acted as a mortgage broker, title and escrow agent, and other professionals to assist O’Neal with tricking the mortgage lenders and banks into lending $2.6 million in mortgage loans on the belief that the straw buyers had the means and the willingness to pay the mortgages.

Every one of the mortgages fell into default, and the lenders were forced to foreclose with an aggregate loss to the lenders in excess of over $900,000.

According to the government’s evidence, the title and escrow companies paid O’Neal from the fraudulently obtained loan proceeds, at times using fraudulent “invoices” which falsely stated that renovation work had recently been completed and that money was due at settlement. As a result of these false invoices and inaccurate settlement statements, title and escrow agents turned over more than $400,000 of fraudulent loan proceeds to O’Neal.

In spite of promising the straw buyers that she would pay the mortgage and in spite of receiving rental income from the D.C. Housing Authority and their client tenants, O’Neal failed to pay the mortgages on all of these properties and the lenders foreclosed on the houses with the result being the tenants were evicted.

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