News Releases
LAWYERS MAKE FIRST APPEARANCES IN MORTGAGE FRAUD CASE
October 31, 2005
FOR IMMEDIATE RELEASE
Sally Quillian Yates, Acting United States Attorney for the Northern District of Georgia, and James H. Byers, Special Agent in Charge, U.S. Secret Service, Atlanta Field Office, announce that Atlanta real estate lawyer, RUSSELL H. HIPPE, III, 38, and former lawyer SHAREL L. PAYNE, 37, were arraigned in federal court today before United States Magistrate Judge Janet F. King on mortgage fraud charges made in a superseding indictment returned by a federal grand jury on October 19, 2005. According to Yates:
HIPPE and PAYNE entered not guilty pleas to the charges and bond was set for each at $100,000. HIPPE is a principal in the Atlanta law firm of Russell H. Hippe, III and Associates. PAYNE was a principal in the Atlanta law firm of the Payne Group.
In addition to HIPPE and PAYNE, the superseding indictment charges Atlanta lawyer MICHAEL BROCHSTEIN, 49, with mortgage fraud, conspiracy, money laundering and related violations in a multi-million dollar mortgage fraud scheme. BROCHSTEIN made his initial appearance before Magistrate Judge E. Clayton Scofield, III on October 25, 2005, where bond was set at $100,000. He is scheduled to be arraigned on the charges on Wednesday, November 2, 2005, before Magistrate Judge Janet F. King. BROCHSTEIN is a partner in the law firm of Brochstein & Bantley.
The indictment supersedes the original indictment filed January 27th, 2005. The superseding indictment also charges Atlanta mortgage broker/loan officer NATHAN PARKER, a/k/a “Nathan Pasha,” 48, his brother, Atlanta loan processor DANIEL PARKER, III, 54, Atlanta real estate appraiser CARLA KINSEY, 40, Atlanta real estate investor DAVID PINNIX, 42, and Atlanta real estate investor LARRY BOLTON, 56.
The superseding indictment charges that beginning in January 1999 and continuing until October 2001, the defendants defrauded financial institutions and other mortgage lenders by recruiting and causing straw borrowers to submit false qualifying information and false documentation to obtain mortgage loans to buy residential properties. The defendants used stolen identities and false Social Security numbers for some of the loan applicants. In other cases, the defendants paid straw borrowers to obtain mortgage loans with false employment, income, assets and liabilities. The indictment charges that the applications for numerous loans totaled approximately $4 million.
The superseding indictment charges that the defendants used fraudulent appraisals, prepared by CARLA KINSEY and others, to inflate the market value of the properties. The defendants also inflated the contract sales prices, thus, substantially increasing the amounts that the lenders would lend on the properties. The superseding indictment also charges that PAYNE, BROCHSTEIN and HIPPE, created materially false settlement statements, which failed to disclose to the lenders, their clients, the accurate receipt and disbursement of loan proceeds, thereby facilitating their co-conspirators’ efforts to conceal the true property sales prices from the mortgage lenders. The superseding indictment also alleges that at certain closings BROCHSTEIN, PAYNE and HIPPE allowed other participants in the scheme to close on properties without the down payments that were required in the sales contracts. The superseding indictment further alleges that BROCHSTEIN, PAYNE and HIPPE failed to disclose to the lenders that the purchasers did not have the required down payments at closings.
According to the public documents filed in this case, the properties are all residential houses in the metro Atlanta area. Some of the lenders and financial institutions which were victimized in the mortgage fraud scheme are located in the Atlanta area.
Members of the public are reminded that the superseding indictment contains only charges. A defendant is presumed innocent of the charges and it will be the government's burden to prove a defendant's guilt beyond a reasonable doubt at trial.
The case is being investigated by Special Agents of the United States Secret Service.
Assistant United States Attorney David Leta is prosecuting the case.
For further information please contact Sally Quillian Yates, Acting United States Attorney, or F. Gentry Shelnutt, Chief, Criminal Division, through Patrick Crosby, Public Affairs Officer, U.S. Attorney's Office, at (404) 581-6016. The Internet address for the HomePage for the U.S. Attorney's Office for the Northern District of Georgia is www.usdoj.gov/usao/gan.