Arizona Branch Manager Pleads Guilty of Fraud

Jake David Abegg Whitman, 33, of Mesa Arizona pleaded guilty on August 18, 2009 to one count of conspiracy to commit bank fraud and seven counts of Bank Fraud. Whitman was the Branch Manager for Academy Mortgage a local mortgage broker firm. Whitman owned ten of the properties on the conspiracy to defraud mortgage lenders however a total for nineteen properties were involved.

Whitman’s scheme was to recruit straw buyers to purchase properties that he had already conspired with an appraiser with to inflate the value. The mortgage applications were completed with fraudulent income, asset and employment information and then submitted to the mortgage lender for approval. The appraiser Whitman used inflated the values of the properties to ensure there would be case back on the properties. In addition, if the straw buyers were unable to provide a down payment Whitman would arrange to provide the down payment to the buyers without disclosing the arrangement to the lender. The buyer would then receive cash back at the closing. The title company for their part would adjust HUD1 to ensure the back end of the scheme was covered.

The mortgages went unpaid and eventually the properties went into foreclosure and cost the lenders over one million in losses.

Whitman was not alone in his conspiracy but merely the ring leading. His co-conspirators are Jeffrey Crandell and Fred Crum, both loan officers at Academy Mortgage; Kurt Douglas Holm, the appraiser whom inflated the property values; Erin Leastman, the escrow officer at Stewart Title and then Academy Mortgage; Tyson Young, a buyer and seller for some of the properties involved in the conspiracy.

United States District Judge G. Murray Snow is schedules to issue sentencing for Whitman on October 26, 2009. Whitman faces thirty years for each count of conspiracy to commit bank fraud and for bank fraud. He can also receive a fine for up to one million dollars.

This case was investigated by the Federal Bureau of Investigation under an operation called “Operation Cash Back”. The Operation has resulted in forty indictments and arrests since June of 2008 most of whom are real estate professionals. Eighteen of those individuals have pleaded guilty.  Assistant United States Attorney for District of Arizona, Kevin Rapp has been handling the cases and is pleased with the outcome. Rapp stated that Whitman has been cooperating with authorities with regard to the prosecution of other individuals in scheme.