Sacramento Man Cops Guilty Pleas In Alleged "Cash Back" Fraud Scam Involving $11M+ In Fraudulent Loan Activity, Approximately 20 Homes

In Sacramento, California, United States Attorney McGregor W. Scott (Eastern District of California) announced that Derek Davis, aka Terry McCullough, 62, of Sacramento, entered guilty pleas in an alleged "cash back" mortgage swindle involving in excess of $1 million in stolen funds and more than $11.3 million in fraudulently obtained loans on approximately 20 homes in the Sacramento region. The losses caused by Davis's conduct exceed $2,500,000, according to prosecutors. From the press release:

• According to [prosecutors], Davis admitted that [...] he participated in a mortgage fraud scheme in which several individuals purchased approximately 20 residential real properties using a form of 100 percent financing called "80/20." In the transactions, Davis caused material misstatements to be made about the purchasers’ monthly income and intent to occupy the property.

• He further admitted that in the transactions an amount approximately equal to the difference between the purchase price and the true market price of the properties was credited as "cash back" at the close of each escrow to the bank account of a Nevada Corporation he controlled [...]. Davis caused these credits to be concealed from lenders. [...] In total, approximately $1,400,000 was transferred to [the Nevada corporation] from escrow companies in connection with the approximately 20 real property transactions.

For the U.S Attorney press release, see Sacramento Area Fraudster Enters Guilty Pleas In 'Cash Back' Mortgage fraud Scheme.

For earlier reports on this case, see:

• The Sacramento Bee (10-11-08): Fraud charged in home loans in three counties,
• U.S. Attorney press release (10-10-08): Two Indicted In "Cash Back" Mortgage Fraud Scheme.

Thanks to Tim McDaniel for the heads up on the story.