Two men from Alpharetta and Roswell have been indicted by a Fulton County Grand Jury for their alleged roles in a reverse mortgages racketeering scheme that targeted senior citizens.
Edmund Chatham of Roswell and Steven Connelly of Alpharetta were indicted on one count of racketeering on Jan. 10, according to a news release from the GA Attorney General's Office.
Racketeering is punishable by five to twenty years imprisonment and/or a fine of up to $100,000 or three times the pecuniary value gained by each defendant.
The indictment charges that between January 2008 and January 2009, the defendants helped put senior citizens into five homes in Atlanta. Chatham and Connelly are accused of then assisting the senior citizens in obtaining reverse mortgages on the homes using fraudulently inflated appraisals. They also deliberately concealed the fact that they were paying fees to individuals for the referral of the senior citizens who applied for the reverse mortgages.
Mortgage lenders made loans based on these omissions and the false equity created by these overstated appraisal values. The defendants fraudulently obtained mortgage proceeds and fees from these reverse mortgages at closings, while the senior citizens received little or no money from the refinances. All of the reverse mortgages were refinanced under the HCEM program.
Reverse mortgages allow homeowners to borrow a percentage of the equity they have accumulated in their homes while remaining in the homes. The loans become due when the homeowners no longer occupy the homes, at which point the lender can sell the property to recover the loan. Senior citizens aged 62 and over may be eligible to obtain a reverse mortgage through the Home Equity Conversion Mortgage (HECM) program, which is administered by the U.S. Department of Housing and Urban Development (HUD). These loans are federally-insured and guarantee that the lenders make their obligations.
Assistant Attorney General Greg Lohmeier is prosecuting this case on behalf of the State of Georgia. The case was investigated by HUD Agents Gustaveous Madden and Tyrone Hardy.