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Mortgage fraud ringleader gets 13 years, to pay $96M
Blames 'own greed' as well as lack of oversight in industry
By Mike Wilkinson
The Detroit News
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Ronnie Duke )
Detroit — About a decade ago, Ronnie Duke played in the fertile world of mortgages and the ex-con learned how to take advantage of lax rules and abundant cash.
From 2003 to 2007, he led a mortgage ring that ran up nearly $95 million in losses as it secured bogus loans that funded a lavish lifestyle for Duke and more than a dozen other associates.
"It was extremely easy," he said Monday, moments after U.S. District Judge Julian Abele Cook sentenced him to 13 years in prison and ordered him to pay nearly $95 million in restitution and a $1 million fine.
Duke was facing up to 30 years in prison because of the size of the fraud — Assistant U.S. Attorney Erin Shaw said it was one of the biggest mortgage fraud rings in the country — and the fact Duke has been convicted six previous times, starting at age 19.
But because Duke cooperated with prosecutors extensively, prosecutors set a 15-year cap on his prison term and asked for a sentence between 13 and 15 years.
An emotional Duke told Cook he had "no one to blame" for his "own greed and stupidity" that led him to turn to mortgage fraud. He was crying as he spoke of a life "so reckless" that led him to spend mortgage money on hot rods, sports cars and a helicopter. He has undergone substance abuse rehabilitation and gotten an associate degree in criminal justice in the last few years as he awaited his sentencing.
After the hearing, Duke again admitted his complicity to a News reporter. But he said he didn't get started in the mortgage business until he met some of his co-defendants, who were already in the mortgage business. And he laid part of the blame on a mortgage industry prodded by Wall Street to make loans that required little documentation and had little government oversight.
He may have stuck his hand deep into the cookie jar, but someone else left the lid off and wasn't paying attention, he suggested.
"It started with the lenders," said Duke, who dropped out of high school in ninth grade. "We got prosecuted, they got bonuses."
Indeed, while some of the biggest lenders have gone bankrupt and their leaders left in disgrace, many are sitting free. At the height of the mortgage frenzy, top executives were earning tens of millions of dollars a year.
The fallout from the toxic loans helped drive the American economy into a deep recession in 2008. Many of the biggest lenders went out of business as capital waned and lending became stagnant. State and federal legislators, as well as the banking industry, toughened lending rules in the wake of the meltdown that Duke and his ring helped create. "No doc" loans, which required no formal documentation of income and other financial standards, no longer exist.
New restrictions cover appraisers and in Michigan, loan officers are now required to take a test and get a license.
"There are so many things in place now that weren't in place then," said Joanne Misuraca, executive director of the Michigan Mortgage Lenders Association.
But in 2003, Duke operated in a different world. He created fake title companies, hired former strippers to process loans and worked with hand-picked appraisers and others to run a ring that secured more than 450 loans across Metro Detroit.
Despite the convictions, the damage by Duke's frauds continues: Homes still sit empty and foreclosures from Grosse Ile to Northville to Fenton have clipped property values.
"People are suffering the consequences of this every day," Shaw said.
Duke went to authorities in 2007 and told them about his fraud, though Shaw said authorities were already investigating.
Over the course of nearly five years, his help would lead to 15 other convictions, with two of his top lieutenants getting 10-year sentences.
Duke is expected to report to prison by June 3.
Mortgage fraud was rampant in the 2000s as many criminals found it easy to fool the mortgage industry, and Michigan had one of the highest rates of mortgage fraud.
Federal agents accused Duke and his co-defendants of arranging loans — targeting homes valued between $350,000 and $600,000 — and then taking a portion of the money for themselves. So-called "straw buyers," whose income and credit history would be fudged in order to qualify, would get paid for their efforts, and initial monthly payments would be made.
However, those payments would stop, and in 80 percent of the cases involving homes, the residence would go into foreclosure.
Duke was a longtime criminal first convicted of embezzlement in Allen Park in 1986. He was sent to prison in 1989 for receiving stolen property and briefly escaped from a prison camp in the Upper Peninsula.
Upon release, Duke moved into mortgages, and ran afoul of Michigan regulators who banned him from the mortgage business in 2006. By then, he had created a network of real estate agents, appraisers and others willing to forge signatures and submit phony documentation to secure millions in loans, according to federal prosecutors.
[email protected]
From The Detroit News: http://www.detroitnews.com/article/20130409/METRO01/304090340#ixzz2PyreQ1vU
Mortgage fraud ringleader gets 13 years, to pay $96M
Blames 'own greed' as well as lack of oversight in industry
By Mike Wilkinson
The Detroit News
2
Comments
Zoom
Ronnie Duke )
Detroit — About a decade ago, Ronnie Duke played in the fertile world of mortgages and the ex-con learned how to take advantage of lax rules and abundant cash.
From 2003 to 2007, he led a mortgage ring that ran up nearly $95 million in losses as it secured bogus loans that funded a lavish lifestyle for Duke and more than a dozen other associates.
"It was extremely easy," he said Monday, moments after U.S. District Judge Julian Abele Cook sentenced him to 13 years in prison and ordered him to pay nearly $95 million in restitution and a $1 million fine.
Duke was facing up to 30 years in prison because of the size of the fraud — Assistant U.S. Attorney Erin Shaw said it was one of the biggest mortgage fraud rings in the country — and the fact Duke has been convicted six previous times, starting at age 19.
But because Duke cooperated with prosecutors extensively, prosecutors set a 15-year cap on his prison term and asked for a sentence between 13 and 15 years.
An emotional Duke told Cook he had "no one to blame" for his "own greed and stupidity" that led him to turn to mortgage fraud. He was crying as he spoke of a life "so reckless" that led him to spend mortgage money on hot rods, sports cars and a helicopter. He has undergone substance abuse rehabilitation and gotten an associate degree in criminal justice in the last few years as he awaited his sentencing.
After the hearing, Duke again admitted his complicity to a News reporter. But he said he didn't get started in the mortgage business until he met some of his co-defendants, who were already in the mortgage business. And he laid part of the blame on a mortgage industry prodded by Wall Street to make loans that required little documentation and had little government oversight.
He may have stuck his hand deep into the cookie jar, but someone else left the lid off and wasn't paying attention, he suggested.
"It started with the lenders," said Duke, who dropped out of high school in ninth grade. "We got prosecuted, they got bonuses."
Indeed, while some of the biggest lenders have gone bankrupt and their leaders left in disgrace, many are sitting free. At the height of the mortgage frenzy, top executives were earning tens of millions of dollars a year.
The fallout from the toxic loans helped drive the American economy into a deep recession in 2008. Many of the biggest lenders went out of business as capital waned and lending became stagnant. State and federal legislators, as well as the banking industry, toughened lending rules in the wake of the meltdown that Duke and his ring helped create. "No doc" loans, which required no formal documentation of income and other financial standards, no longer exist.
New restrictions cover appraisers and in Michigan, loan officers are now required to take a test and get a license.
"There are so many things in place now that weren't in place then," said Joanne Misuraca, executive director of the Michigan Mortgage Lenders Association.
But in 2003, Duke operated in a different world. He created fake title companies, hired former strippers to process loans and worked with hand-picked appraisers and others to run a ring that secured more than 450 loans across Metro Detroit.
Despite the convictions, the damage by Duke's frauds continues: Homes still sit empty and foreclosures from Grosse Ile to Northville to Fenton have clipped property values.
"People are suffering the consequences of this every day," Shaw said.
Duke went to authorities in 2007 and told them about his fraud, though Shaw said authorities were already investigating.
Over the course of nearly five years, his help would lead to 15 other convictions, with two of his top lieutenants getting 10-year sentences.
Duke is expected to report to prison by June 3.
Mortgage fraud was rampant in the 2000s as many criminals found it easy to fool the mortgage industry, and Michigan had one of the highest rates of mortgage fraud.
Federal agents accused Duke and his co-defendants of arranging loans — targeting homes valued between $350,000 and $600,000 — and then taking a portion of the money for themselves. So-called "straw buyers," whose income and credit history would be fudged in order to qualify, would get paid for their efforts, and initial monthly payments would be made.
However, those payments would stop, and in 80 percent of the cases involving homes, the residence would go into foreclosure.
Duke was a longtime criminal first convicted of embezzlement in Allen Park in 1986. He was sent to prison in 1989 for receiving stolen property and briefly escaped from a prison camp in the Upper Peninsula.
Upon release, Duke moved into mortgages, and ran afoul of Michigan regulators who banned him from the mortgage business in 2006. By then, he had created a network of real estate agents, appraisers and others willing to forge signatures and submit phony documentation to secure millions in loans, according to federal prosecutors.
[email protected]
From The Detroit News: http://www.detroitnews.com/article/20130409/METRO01/304090340#ixzz2PyreQ1vU
