Brian Causey, a former loan officer and son of the former New Hanover County sheriff, falsified information on 10 loans as part of a massive real-estate scheme in Columbus County, according to new information revealed in court documents on Friday.
The 37-year-old is the only son of former Sheriff Sid Causey, who is running for New Hanover County commissioner.
Brian Causey and three other men pleaded guilty Thursday in a Greenville federal courtroom to conspiracy to commit mail and wire fraud.
Also pleading guilty in the scheme were: Horace Hance Mayo III, the 39-year-old owner of Coastline Mortgage Consultants who lives in Wrightsville Beach; Michael Paul Fluharty, the 33-year-old former owner of American Mortgage Consultants in Chadbourn, which was dissolved; and Tyrone Ford, a 39-year-old Wilmington man.
Brian Causey's role in the scheme was from December 2001 to November 2002, according to his plea agreement.
Brian Causey, who worked for Wachovia bank in Wilmington, along with Mayo, Fluharty and Ford falsified information such as employment history, income, assets and credit letters to underwrite loans between 1998 to sometime in the 2000s, according to a news release from the U.S. Attorney's Office and federal court documents.
The four were charged federally on June 21.
Ultimately, investigators found more than 150 fake loans were submitted and more than $6 million in loan disbursements were given out with all but a few of the loans being foreclosed on, according to the release.
The scheme was twofold, and when it started in the late 1990s, it worked like this: Daniel Adams Rooks, who did business as Rooks Properties and R&J Development Company in Whiteville, bought land in Columbus County, subdivided it, put mobile homes on it and looked for low-income, first-time home buyers to purchase the properties, according to a criminal indictment filed in federal court.
Rooks' scheme also involved the following people: Stanley Garfield Williams Jr., a licensed mortgage broker; Rooks' father, Alford Eugene Rooks, who provided bogus down payments used by buyers to get financing from lenders to buy Rooks' property; Henry Clay Blake Jr., a property appraiser who falsified appraisals; and Cynthia Tilley Greer, a paralegal and notary who notarized fake real estate documents, according to the criminal indictment.
Three of the five have pleaded guilty in federal court to mail fraud conspiracy and money laundering conspiracy. Alford Rooks pleaded guilty to money laundering conspiracy and Blake received a deferred prosecution.
In the indictment, a forfeiture notice says $450,000 must be forfeited along with property.
Together, Rooks and his co-defendants profited from the scheme by submitting fake loan applications and supporting documents to banks and other lenders that would issue loans to unqualified buyers for amounts exceeding the market value of the properties, the indictment shows.
All told, 60 loans were issued with lenders losing more than $3.5 million, according to the complaint.
Additionally, all but one of the loans was foreclosed on.
Later on, in early 2000, Rooks, Williams and others started buying up the foreclosed properties and flipping – or reselling them quickly – for inflated prices.
Williams and others also sought people to act as “straw buyers,†meaning people would be paid – sometimes several thousands of dollars – so property and loans could be put in their names.
In the end, the flipping scheme resulted in 30 loans being issued, all but four of which were foreclosed on. Additionally, lenders lost more than $2.5 million, according to the indictment.
Brian Causey at some point left Wachovia, where he worked, and went into business with Mayo III, who falsified information for three loans, the release states.
Fluharty, a former employee of Rooks, helped Rooks' father falsify documents regarding down payments, and he took part in faking five loans, according to the release.
Meanwhile, Ford recruited straw buyers as part of the flipping scheme and acted as a straw buyer, the release states.
The Internal Revenue Service and the FBI investigated the scheme, but it's unknown what prompted the investigation, when it started and why charges against Causey and the others weren't filed until this year.
Court documents show Brian Causey paid $250,000 in restitution Thursday – or his share of earnings from the scheme.
Mayo must forfeit $50,000; Fluharty's amount is $5,000 and Ford's is $18,500.
Brian Causey and his co-defendants could face up to 30 years in prison and a $1 million fine when they are sentenced in November.
Veronica Gonzalez: 343-2008
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