NEWS RELEASE

OFFICE OF THE UNITED STATES ATTORNEY

WESTERN DISTRICT OF MISSOURI

JOHN F. WOOD

Contact Don Ledford, Public Affairs ● (816) 426-4220 ● 400 East Ninth Street, Room 5510 ● Kansas City, MO 64106

www.usdoj.gov/usao/mow/index.html

JANUARY 8, 2009

FOR IMMEDIATE RELEASE

GLADSTONE INSURANCE AGENT PLEADS GUILTY TO

$12.6 MILLION MORTGAGE FRAUD

CONSPIRACY INVOLVED NEW UPSCALE HOMES

IN LEE’S SUMMIT, RAYMORE

KANSAS CITY, Mo. – John F. Wood, United States Attorney for the Western District of Missouri, announced that a Gladstone, Mo., insurance agent pleaded guilty in federal court today to his role in a $12.6 million mortgage fraud scheme that involved 25 residential properties in Lee’s Summit and Raymore, Mo.

Ronald E. Brown, Jr., 39, of Gladstone, pleaded guilty before U.S. Chief District Judge Fernando J. Gaitan this morning to the charge contained in an Oct. 29, 2008, federal indictment.

By pleading guilty today, Brown admitted that he participated in a conspiracy to defraud mortgage lenders from June 2005 to May 2007. Brown was among more than a dozen conspirators who were involved in buying and selling new homes in the Raintree and Belmont Farms subdivisions in Lee’s Summit and the Eagle Glen subdivision in Raymore. Buyers purchased the homes at inflated prices, obtaining mortgage loans by providing false information to mortgage lenders, then keeping the extra proceeds. Buyers created shell companies for the purpose of receiving those kickbacks from the builder, with kickbacks ranging from $60,000 to $125,000 on each house.

Brown, a self-employed insurance agent doing business as The Brown Insurance Agency in Kansas City, Kan., obtained insurance for the properties that were purchased. After purchasing two false Social Security numbers for $10,000, Brown used the false Social Security number to purchase three properties in Lee’s Summit. In each case, Brown made material misrepresentations upon which the lenders relied in making the mortgage loans, which totaled $1,339,700. From the purchase of these properties, unbeknownst to the lenders, Brown received a total of $279,426.

In total during the course of the conspiracy, mortgage lenders approved 25 loans totaling $12,616,990. From that total, buyers received approximately $2,343,337 without the lenders’ knowledge.

Under federal statutes, Brown is subject to a sentence of up to five years in federal prison without parole, plus a fine up to $250,000 and an order of restitution. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.

This case is being prosecuted by Assistant U.S. Attorney Linda Parker Marshall. It was investigated by the Federal Bureau of Investigation and IRS-Criminal Investigation.

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