Illinois Feds Indicted Ex-Mortgage Company Owner In Alleged Flipping Scheme

In Illinois, the Springfield State Journal Register reports:

• The former owner of a Springfield mortgage company was indicted by a federal grand jury Tuesday for allegedly providing fraudulent financing in a real estate “flipping” scheme in Springfield and Decatur that involved more than $8 million worth of transactions. Dennis R. Schneider, 53, ... who previously owned and operated State Street Mortgage and Finance Co. ..., is accused of brokering more than $3 million in fraudulent real estate sales and financing transactions from 2000 to 2003. Schneider specifically is charged with 11 counts of bank fraud, mail fraud and conspiracy to commit money laundering.

According to the indictment, Schneider helped finance deals involving Decatur businessman Gary Knox, who bought dozens of rundown rental properties, which would then be flipped for more than the homes were worth.

Mortgages were allegedly approved for amounts greater than the properties appeared to be worth, and closing statements showed that Knox sometimes pocketed thousands of dollars from the loans. The loans were then sold off, many times to out-of-state lenders, who were left stuck with them as many of the properties went into foreclosure. Some people who bought rental property from Knox and his associates ended up with multiple foreclosures.

In addition to Knox, 61, of Decatur, Frank Kelly Ciota, 46, of Riverton and Dennis Wiese, Jr., 39, a real estate appraiser from Belleville, were implicated in the scheme. Knox, Ciota and Wiese all have pleaded guilty and are awaiting sentencing.


As far as Schneider goes, each fraud count he faces carries a maximum of up to 30 years in prison; the count of conspiracy to commit money laundering carries a penalty of up to 20 years. For more, see City man indicted for ‘flipping’ real estate (Previously owned State Street Mortgage).