NEWS RELEASE

OFFICE OF THE UNITED STATES ATTORNEY

WESTERN DISTRICT OF MISSOURI

MATT J. WHITWORTH

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

MAY 20, 2009

FOR IMMEDIATE RELEASE

THREE MORE DEFENDANTS PLEAD GUILTY TO

$12.6 MILLION MORTGAGE FRAUD

CONSPIRACY INVOLVED NEW UPSCALE HOMES

IN LEE’S SUMMIT, RAYMORE

            KANSAS CITY, Mo. – Matt J. Whitworth, Acting United States Attorney for the Western District of Missouri, announced today that three more defendants have pleaded guilty to their roles in a $12.6 million mortgage fraud conspiracy that involved 25 upscale residential properties in Lee’s Summit, Mo., and Raymore, Mo.

            Steven M. Salas, 35, of Hacienda Heights, Calif., pleaded guilty before U.S. Chief District Judge Fernando J. Gaitan this morning to the charge contained in an Oct. 29, 2008, federal indictment. James F. Simpson, 40, of Lee’s Summit, Mo., pleaded guilty to the conspiracy on May 4,2009, and Willie Charles Cadenhead, 39, of Grandview, Mo., pleaded guilty to the conspiracy on May 13, 2009.

            Salas, Simpson and Cadenhead are among nine defendants who have pleaded guilty to the scheme to buy and sell new homes – all of which were built by Jerry R. Emerick, 39, of Raymore – 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 for more than the actual sale price by providing false information to mortgage lenders, then kept the extra proceeds. Buyers created shell companies for the purpose of receiving those kickbacks from Emerick, with kickbacks ranging up to $125,000 on each house.

            In total during the course of the conspiracy from June 2005 to May 2007, mortgage lenders approved loans for 25 homes totaling more than $12.6 million. From that total, buyers received approximately $2.3 million without the lenders’ knowledge.

            Simpson admitted that he purchased three properties in Raymore and one property in Lee’s Summit as part of the conspiracy. In obtaining mortgage loans to make the purchases, Simpson signed loan applications containing material misrepresentations upon which the lender relied. The misrepresentations included: income and employment, address, occupancy, and use of proceeds. Simpson did not intend these residences to be his primary residences. The resulting loans totaled $1,406,100. From the purchase of these properties, unbeknownst to the lenders, Simpson received $302,000 (paid to his company M-PEN Investments, Inc., and at his direction to Wells Fargo Home Loan).

            Salas admitted that he purchased three properties on Southeast Snaffle Bit Court in Lee’s Summit as part of the conspiracy, in each instance making material misrepresentations upon which the lenders relied in making the mortgage loans totaling $1,645,390. From the purchase of these properties, and unbeknownst to the lenders, Salas received kickbacks totaling $255,000.

            Cadenhead admitted that he purchased one property on Southeast Snaffle Bit Court in Lee’s Summit as part of the conspiracy. In obtaining mortgage loans to make the purchase, Cadenhead made material misrepresentations in the loan applications upon which the lender relied, including false income, asset and liability information, occupancy, false representation that he had not had a foreclosure in seven years and false representations regarding the use of the proceeds. The loans totaled $516,455. From the purchase of this property, unbeknownst to the lender, Cadenhead received $94,000 payable to his company, Awesome Innovations.

            Emerick owns and operates Ty Construction and Residential Contracting, LLC, which is engaged in the business of residential construction, primarily in Lee’s Summit and Raymore. He pleaded guilty on April 9, 2009, to conspiracy to commit mortgage fraud and wire fraud and to transfer funds obtained by fraud across state lines.

            Emerick admitted to participating in the fraudulent mortgage loans involving 22 residential properties in Lee’s Summit and three residential properties in Raymore. Emerick was aware that loan applications and supporting documentation containing material false and fraudulent representations and omissions of fact would be submitted to mortgage lenders. Emerick was also aware that buyers were creating false business entities in order to receive loan proceeds without the knowledge of the lender.

            Emerick admitted that he submitted to title companies false documentation and made fraudulent material representations to title companies, in order for the buyers to receive funds from the loan proceeds; he also made payments to the buyers outside of closing.

            Stefan M. Guerra, 30, of Lee’s Summit, and Daryle A. Edwards, 37, and Leon T. Jones, 42, both of Olathe, Kan., pleaded guilty on March 3, 2009.