Belsky Weinberg & Horowitz, LLC A Personal Injury & Workers’ Compensation Law Firm

Waterfront Baltimore Neighborhood Target of Mortgage Fraud

Waterfront.jpgA Baltimore man has pleaded guilty in federal court to engaging in mortgage fraud so as to purchase several properties in a Baltimore neighborhood known for high property values and proximity to Baltimore's harbor.

Kenneth Koehler admitted that, beginning in 2006, he obtained fraudulent loans on six properties in Fells Point, all of which ended up in foreclosure. Five of the properties, were on the same street and four were within the same block, according to a statement released by the Justice Department.

Koehler obtained financing for both the purchase and sale of his properties from Worthington Mortgage Group, LLC, a mortgage brokerage company that was controlled by his former business partner, according to the government's statement. Koehler admitted that, beginning in 2006, he conspired with his former business partner to obtain loans for Worthington Mortgage clients under false pretenses. Koehler's former business partner arranged with Koehler to use Voicebank, a technology leasing company they previously owned, as a fictitious employer for Worthington borrowers who needed verifications of their employment. Voicebank went out of business in 2001. The Voicebank phone number activated voicemail used by Koehler and his former business partner. If called by the lender, either Koehler or his co-conspirator would verify the employment or income information supplied on the loan application.

Koehler also obtained two loans by fraudulently inflating his monthly income. In 2006, Koehler signed a loan application for the refinance of a loan on a property located at 229 S Chapel Street in Baltimore, prepared by his co-conspirator, which falsely stated that Koehler earned $20,000 per month with Voicebank, according to the Justice Department statement. In 2007, the same false information was submitted on a loan application for the purchase of property located at 2217 Gough Street in Baltimore. Both properties went into foreclosure, resulting in losses of more than $221,000.

In 2007 and 2008, Koehler and his co-conspirator arranged for the purchase of four properties, all located on S Chapel Street and all owned by Koehler. In each instance, Koehler concealed the purchase price of the properties from the lenders by stating on documents that he had received a substantial down payment from the buyers when no such payments had occurred.

Koehler also kicked back part of the sales proceeds from each loan to the buyers, further reducing the sales price of the property. By concealing the true sales price for the properties, the conspirators manipulated the lenders into funding more than 100 percent of the purchase price.

Koehler faces a maximum sentence of 20 years in prison and a fine of $250,000. A federal trial court judge has scheduled his sentencing for January 3, 2013.

Belsky, Weinberg & Horowitz are experienced mortgage, bankruptcy and consumer debt attorneys. Call us at 410-234-0100 or email us for a free consultation.

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