KANSAS CITY, Mo. – A California woman has pleaded guilty to her role in a credit history fraud scheme in the first federal prosecution of people who sold stolen Social Security numbers for the purpose of improving the buyers' credit ratings.
Karen Washam-Hawkins, 49, of Carson, Calif., pleaded guilty Wednesday to conspiracy to commit wire fraud and interstate transportation of money obtained by fraud. A second defendant, William Bartlett, 40, of Tampa, Fla., pleaded guilty in late March to his role in the conspiracy.
Prosecutors said the credit history manipulation allowed three men to purchase six homes for nearly $3 million in a suburban Kansas City housing development that was tainted by illegal kickbacks, inflated prices and other types of mortgage fraud.
In all, 19 people have pleaded guilty in a $12.6 million scheme involving 25 upscale homes in Lee's Summit and Raymore that left banks holding bad loans and caused property values to nosedive.
Three of those people -- Ronald Brown Jr. of Gladstone, Daryle Edwards of Overland Park, Kan., and Shade Jerome Howard of Anaheim, Calif. -- admitted purchasing false Social Security numbers to enhance their creditworthiness to obtain mortgages. Prosecutors said Brown bought three homes totaling about $1.3 million, Howard bought two properties for $1.2 million and Edwards purchased one property for $418,500.
Conspirators in the mortgage scheme admitted engineering the sale and purchase of new homes at inflated prices with fraudulently obtained mortgages. Prosecutors said the deals were structured so the buyers would receive the difference between the actual sales prices and the inflated prices.
Buyers received about $100,000 on each home, prosecutors said, and former Lee's Summit real estate agent Angela R. Clark pulled in more than $400,000 in commissions and other payments because of the inflated prices.
Clark, who orchestrated the scheme, has been sentenced to 20 months behind bars and must pay more than $5.6 million in restitution. She sold the homes for Raymore builder Jerry R. Emerick at inflated prices and helped buyers get mortgages far exceeding the value of the homes.
Emerick was sentenced to 2 1/2 years in prison and ordered to pay restitution of more than $5 million after pleading guilty to conspiracy to commit mortgage fraud and wire fraud, and to transferring funds obtained by fraud across state lines.
In her guilty plea, Washam-Hawkins admitted obtaining the false Social Security numbers and helping create false credit histories attached to them. Bartlett used his businesses to provide fraudulent account and payment information to a credit bureau, building up the credit scores associated with the numbers.
The Associated Press reported last year that federal agents investigating the mortgage fraud scheme discovered a proliferation of companies that sell stolen Social Security numbers disguised as credit repair tools called credit profile numbers, also known as credit privacy numbers, or CPNs. Investigators said children are prime targets because most won't use their Social Security numbers to get credit for several years, which means fraudsters can use their numbers for long periods of time undetected.
"Local FBI agents dug deeper into a mortgage fraud scheme that resulted in a multimillion dollar loss in the Lee's Summit area, U.S. Attorney Beth Phillips said at the time. "By digging deeper into that mortgage fraud scheme, investigators uncovered a second scheme, a credit history fraud scheme that was operating in the shadows of the mortgage fraud scheme.
Washam-Hawkins and Bartlett face maximum federal prison sentences of five years without parole, fines up to $250,000 and an order of restitution. Sentencing dates for the two have not been scheduled. A California woman has admitted selling stolen Social Security numbers in what federal prosecutors in Kansas City say is the first time suppliers have been charged in a credit history fraud case.
Karen Washam-Hawkins of Carson, Calif., pleaded guilty Wednesday to conspiracy to commit wire fraud and interstate transportation of money obtained by fraud. She admitted selling false Social Security numbers to three men who were among 19 people who pleaded guilty in a $12.6 million mortgage fraud scheme.
Prosecutors say co-defendant William Bartlett of Tampa, Fla., provided false information to build the credit scores attached to the stolen numbers.
The three buyers used their false credit histories to acquire funding for six homes worth more than $2.7 million
Bartlett pleaded guilty in March to his role in the scheme.