DENVER LOAN OFFICER SENTENCED TO FEDERAL PRISON FOR MORTGAGE FRAUD SCHEME
DENVER – Linda Carnagie, age 61, of Bennett, Colorado, was sentenced yesterday by U.S. District Court Judge Marcia S. Krieger to serve 41 months (over 3 years) in federal prison for conspiracy to defraud the United States, conspiracy to commit money laundering, wire fraud, and false statements, Acting U.S. Attorney David Gaouette, IRS Criminal Investigation Special Agent in Charge Christopher Sigerson, and Housing and Urban Development (HUD) Inspector General Kenneth Donohue announced. Following the prison term, Carnagie was ordered to spend 3 years on supervised release. Judge Krieger also ordered Carnagie to pay restitution totaling $206,693, forfeit $41,205, which represents the proceeds of her illegal activities, and pay a $2,100 special assessment to a victims of crime fund. Judge Krieger ordered Carnagie to report to a facility designated by the U.S. Bureau of Prisons by August 31, 2009.
Linda Carnagie was indicted by a federal grand jury in Denver on November 15, 2004, followed by superseding indictments on February 17, 2005 and April 20, 2005. She was found guilty following a jury trial on December 1, 2006. On March 6, 2006, Judge Krieger acquitted Carnagie of the conspiracy charges, however, on July 22, 2008, the United States 10th Circuit Court of Appeals reversed the acquittal, re-instating the jury’s guilty verdicts.
According to the indictments, as well as evidence presented during the trial, Linda Carnagie was an independent contractor who worked with Highland Mortgage of Evergreen, Colorado. Starting in February 1999, and continuing through July 2004, Carnagie conspired with others to defraud the United States. As part of the scheme, she falsified information in loan applications and supporting documentation submitted to mortgage companies and to FHA/HUD for the purpose of obtaining mortgage loans and FHA/HUD mortgage insurance.
Carnagie and others working with her would illegally assist buyers who could not qualify for an FHA-insured mortgage legitimately by falsifying the borrowers’ social security numbers, verifications of employment, and prepare and submit false income information, including false W2's (wage and tax statements), pay stubs, prepare false credit reports, and other false documents. The defendant and others would take the false information about the borrowers and then submit it to the mortgage companies, and thereafter forwarded to FHA/HUD, for the purpose of falsely representing that the borrowers were financially qualified to undertake their mortgage obligations.
“This prison sentence should serve as a deterrent to those in the mortgage industry not to commit fraud,” said Acting U.S. Attorney David Gaouette.
“Mortgage fraud erodes our economy, and directly threatens the financial health of the communities in which we live,” said Christopher M. Sigerson, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office.
“The sentencing of Linda Carnagie should send a strong message to anyone connected with fraudulently originating FHA insured loans that the United States Department of Housing and Urban Development, Office of Inspector General, will not tolerate such activity and will aggressively investigate loan fraud,” said Kenneth Donohue, the U.S. Department of Housing and Urban Development Inspector General.
This case was investigated by the HUD Office of the Inspector General and IRS Criminal Investigation.
Carnagie was prosecuted by Assistant U.S. Attorneys Patricia Davies, Linda McMahan, and Matthew Kirsch. Assistant U.S. Attorney Martha Paluch provided substantial assistance with the 10th Circuit Court of Appeals brief.
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