Davenport attorney convicted of Mortgage-Related Fraud | Crime
DAVENPORT, Iowa – On September 13th, 2011, Marc Robert Engelman, 60, of Davenport Iowa, was found guilty of two counts of bank fraud, six counts of wire fraud, and one count of conspiracy after a one-week trial.
Engelman is a Davenport-area real estate attorney, charged with participating in a scheme to defraud banks and lenders in 2005 and 2006.
According to the Department of Justice, the overall scheme involved some 30 properties, mostly multi-unit rental properties, in the Davenport area purchased by Darryl Hanneken and Robert Herdrich.
Most of the properties were located in the Goose Creek Heights neighborhood.
In the trial, the evidence allegedly showed that Englemann along with real estate agent, Mary Pat Harper, assisted Darryl Hanneken and Robert Herdrich in carrying out a scheme to defraud banks and mortgage lenders.
According to the Department of Justice, Hanneken and Herdrich would agree to buy a property at a certain price. Then they would propose a higher price to the seller. An appraiser would then provide an inflated appraisal to reflect the higher price. After the purchase had closed, the seller would then pay Herdrich and Hanneken the difference between the original low price and the bogus, higher price. This means that the lender was deceived about the true value of the property and would lend Herdrich and Hanneken more money than the property was actually worth.
Engelmann allegedly assisted in nine of these property transactions.
To top it all off, Hanneken and Herdrich defaulted on almost all of the mortgage loans. According to the Department of Justice, the pair reportedly defaulted in most cases without even making a first payment.
Together they borrowed over $3.7 million and received almost $900,000 in kickback payments.
Even after the banks and lenders sold the properties to recoup their losses, they allegedly suffered over $1.2 million in losses of the $3.7 million loaned.
Hanneken and Herdrich were sentenced to 40 months of prison each. Mary Lee Reinking and Natalie Long, who were formerly mortgage brokers at Crow Valley Mortgage, pleaded guilty to felony mortgage fraud charges in connection with two of the 30 transaction and were sentenced to probation.
Paul Bieber, an attorney allegedly involved in the fraud scheme, pleaded guilty to misprision of felony, a felony offense, and has not yet been sentenced.
Mary Pay Harper, a real estate agent, pleaded guilty to felony mortgage fraud charges and has not been sentenced either.
According to the Department of Justice, the maximum penalty for each count of bank fraud is up to 30 years in prison, a fine not to exceed $1,000,000, or both. The maximum penalty for each count of wire fraud is up to 20 years in prison, a fine not to exceed $250,000, or both. The maximum penalty for conspiracy is up to five years in prison, a fine not to exceed $250,000, or both.
Read about the trial of Hanneken and Herdrich here.