Atlanta Business Chronicle
A Georgia man pleaded guilty late Wednesday to running a $15 million mortgage fraud ring in Atlanta’s West End.
Kevin G. Wiggins, 41, of Ellenwood, Ga., pleaded guilty in federal district court to charges related to a large-scale mortgage fraud scheme that targeted West End neighborhoods in Atlanta in 2001 and 2002.
Wiggins contracted to buy more than 80 distressed properties primarily in Atlanta West End neighborhoods at their true value which ranged from $24,000 to $80,000. Then, before he actually bought the property, he deeded the properties to unqualified straw borrowers, some of whom were his relatives. Using false information about the unqualified straw borrowers, he arranged for financing for them and got more than $15 million in mortgage loans.
When Wiggins applied for the loans in the names of the straw borrowers, he inflated each property’s value by as much as $100,000 by lying that the properties had been completely renovated or “rehabbed.” Wiggins then claimed the properties were occupied by tenants paying rent in excess of the projected monthly mortgage amount.
Wiggins paid a co-defendant in the case, appraiser Frank W. Astwood, 37, of Hampton, three times the legitimate appraisal fees to write appraisals that falsely reflected that each property had been rehabbed.
Wiggins bought the properties after he had already “sold” them to the straw borrowers, using proceeds from the “sales,” which came from the fraudulently inflated mortgage loans obtained in the straw borrowers’ names. Wiggins operated this scheme through a number of companies he had established, such as “TWF,” and “The Wiggins Family.” The lenders in this scheme suffered $7 million in losses, and affected West End neighborhood property taxes doubled due in part to the fraudulently inflated property valuations.
Wiggins, along with co-defendants Astwood and Lydia Wiggins Christopher, 59, of Union City, were indicted by a federal grand jury in February 2007.
Wiggins pleaded guilty to one count of conspiracy and two counts of wire fraud. He could receive a maximum sentence of 15 years in prison and a fine of up to $750,000 and be ordered to pay restitution of $7 million.
Astwood pleaded guilty to this mortgage fraud conspiracy on June 14, and could get a maximum sentence of five years in prison and a fine of up to $250,000 and be ordered to pay restitution.
Christopher has pleaded not guilty to the charges and awaits trial.
Sentencing for Wiggins and Astwood is set for at Jan. 31, 2008 before U.S. District Judge Jack T. Camp.
“The use of a phony rehab scheme and straw borrowers to steal money from mortgage lenders on so many properties that were later foreclosed devastated an area of our community that was struggling to preserve its historic character,” U.S. Attorney David E. Nahmias said. “This guilty plea, along with the prior guilty plea of a complicit appraiser, resulted from a committed FBI investigation supported by neighborhood activists. We will continue to aggressively investigate and prosecute those who promote such mortgage fraud schemes in North Georgia.”