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Former Countrywide loan officer gets 15 years for mortgage fraud

March 09, 2012|By Stuart Pfeifer
(Damian Dovargan/Associated…)

A former Countrywide Financial Corp. loan officer has been sentenced to 15 years in federal prison after pleading guilty to charges related to a nearly $40 million mortgage fraud scheme.

Federal prosecutors alleged that Paige Kinney of Phoenix operated the scheme from 2005 to 2007, using “straw buyers” to apply for home loans they never intended to repay.

She submitted altered documents, such as bank statements and pay stubs, to make the buyers appear more credit-worthy than they were, prosecutors said. The straw buyers indicated they would make the homes their primary residences, but actually never intended to occupy them, prosecutors said.

As part of the scheme, Kinney and other conspirators persuaded banks to issue loans that exceeded the homes’ values, with excess cash going to Kinney and her criminal partners, the FBI said in a news release.

Countrywide and other lenders issued more than $38 million in loans based on the fraudulent applications, with about $8.7 million going to Kinney and other conspirators, the FBI said.

Kinney, 43, who also used the name JamieLee Lawler, was working as a Countrywide loan officer during the scheme, prosecutors said. She used the cash to buy luxury cars, jewelry and homes in Phoenix and San Diego and to pay “straw buyers” for working with her in the scheme, the FBI said.

“Mortgage fraud has had a tremendous adverse impact on both the economy and the citizens of Arizona,” said James L. Turgal Jr., special agent in charge of the FBI’s Phoenix office. “It will continue to remain a top criminal priority of the FBI.”

Kinney had previously pleaded guilty to wire fraud, mail fraud and bank fraud. In addition to the prison term, U.S. District Judge Neil V. Wake ordered her to pay $22 million in restitution to banks that were defrauded in the scheme.

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