SIKESTON -- Two St. Louis-area men were indicted for their roles in a mortgage fraud scheme, which resulted in the purchase and later foreclosure of several homes in Sikeston.
Russell McBride, 46, of Creve Coeur and Robert Wrolstad, 59, of O'Fallon were charged in a 34-count indictment. The two are expected to appear Thursday in federal court in Cape Girardeau.
The two men are accused of recruiting investors to buy Sikeston properties for more than the actual selling price. They allegedly got appraisals overvaluing the properties and received inflated loan proceeds while working for Century Mortgage and Finance Inc. The provider of mortgage-related services, which is now out of business, had offices in Sikeston, Cape Girardeau and St. Louis County.
"Cases like this are an example of the impact that mortgage fraud has contributed to the credit crisis," said Catherine L. Hanaway, United States attorney for the Eastern District of Missouri, in a news release. "Mortgage fraud causes damage to the economy as well as our neighborhoods. The investigation and prosecution of these cases can contribute to the restoration of confidence in the housing market."
The scheme resulted in at least a half million in losses, Hanaway said. In addition to those losses, it pushed several in Sikeston out of their rental homes when the homes were foreclosed.
C.D. Alcorn is a Sikeston realtor who had about a half-dozen properties affected by the scheme. Deeds for some of Alcorn's properties were forged and then sold as part of the mortgage fraud. He didn't know anything was amiss until the locks were changed on one of his properties.
Others, mostly from the St. Louis area, were affected when they purchased the homes as rental properties at inflated values. Unable to keep up with payments, that led to the foreclosure of several properties.
Alcorn said he's glad the indictments have come. "But I think it's been too long," said Alcorn, noting the "housejackings" began more than two years ago.
Tom Dirnberger, recorder of deeds in Scott County, said that, compared to other areas, the indictments came in about the same amount of time.
"I've been to a number of land fraud seminars over the past couple of years and they say it takes four to five years," he said. "They tell you (the indictments) are going to happen, it just takes time."
Dirnberger said he felt confident the indictments would come when investigators began asking for certified copies of deeds for properties involved.
He's ready to learn more about the people really affected. "I'm interested in how much money they schemed from the people out of St. Louis who bought the homes," said Dirnberger. "And how much money did those two people make?"
According to his estimates, the banks in California which provided the mortgages likely lost close to $18 million -- which isn't necessarily the amount McBride and Wrolstad profited.
As far as recouping his losses, Alcorn isn't too optimistic. "I won't get it back -- the properties have already been sold," he said. "It took me 20 years to pay for them, but it didn't take me long to lose them."
However, he said that, at Monday's meeting, someone asked about monetary reimbursements, and officials responded it was something they would try to get. However, officials were cautious, said Alcorn, because they aren't sure where the money is and if it's possible to reimburse the homeowners who were robbed.
"I'm not going to sit and wait on it," said Alcorn.
Investigators learned of concerns when bankers in Sikeston began to notice inflated prices linked to the transactions.
The indictment relates to a dozen properties in Sikeston. Hanaway said as a mortgage broker, Century Mortgage would prepare mortgage applications and other documentation for borrowers. Then, it would find a mortgage lender to make a loan.
The indictment alleges that from July 2005 through November 2006, investors recruited by the two men bought Sikeston real estate. The property owners sold the land at or near market value.
However, the investors paid significantly more than the price sellers received, after the men received appraisals that overvalued the properties. For instance, in one case, a purchaser paid $66,000 for a property the seller then sold for $7,500.
Hanaway said documents supplied to the mortgage companies making the loans ''were falsified in many respects.''
The indictment said McBride told investors the properties were good investments, that rents would pay the mortgages and, in some cases, that property could be sold again in about a year for a profit.
McBride and Wrolstad were charged with one count of conspiracy to commit wire fraud and mail fraud, 12 counts of wire fraud and 12 counts of mail fraud. McBride faces six counts of money laundering and Wrolstad is charged with three counts of money laundering.
The Associated Press contributed to this report