Conviction sends mortgage fraud warning

The mastermind behind fraudulent mortgage loans on homes sold in the Bartram Springs subdivision was convicted today following a joint local investigation by the FDLE and FBI; according to Florida Department of Law Enforcement Special Agent in Charge of the Jacksonville Region, Dominick Pape.

A federal jury found 43-year-old Kessler Holzendorf guilty of conspiracy, multiple counts of mail fraud, and multiple counts of wire fraud because of his involvement in the large-scale mortgage fraud scheme.

“The partnership of agencies investigating and prosecuting this case has led to an outstanding result,” Pape told Historic City News. “This outcome should send a message to potential violators that mortgage fraud will not be tolerated in Northeast Florida.”

According to US Attorney Robert E O’Neill, Holzendorf now faces a maximum penalty of 20 years in federal prison for each of the thirty-one counts. His sentencing hearing is scheduled for January 28, 2013. Holzendorf was indicted on April 13, 2011.

Federal Bureau of Investigation Special Agent in Charge of the Jacksonville Field Office, Michael Steinbach, commented, “The FBI is committed to vigorously pursuing the perpetrators of mortgage fraud at every level, and these investigations remain one of our top national priorities.”

The victims in these crimes, the mortgage lenders who advanced funds to purchase high-end properties in the area, were tricked into providing substantial sums of money based on a collection of falsified documents that profited Holzendorf, a real estate agent, and a mortgage company affiliated with Holzendorf.

The scheme:

Holzendorf recruited real estate professionals to act as buyers.

The buyers submitted false loan applications, reflecting:
• inflated sales prices
• false statements that the homes were personal residences
• false statements that the buyers were occupying the properties
• false statements regarding the buyer’s employment status
• false statements regarding the buyer’s income level

Holzendorf created a fake company, “Home Improvements and Repair by Design”.

The fake company presented invoices at closing for improvements to the properties that were never made — causing the purchase price and value of the property to be overstated.

Holzendorf and his conspirators received:
• real estate commissions of more than $339,000
• mortgage broker compensation of more than $189,000
• illegal kick-backs to buyers of more than $1.1 million
• $50,000 to $250,000 per case for unmade improvements

“Our office remains committed to prosecuting those involved in these types of fraudulent crimes,” O’Neill told Historic City News. “Mortgage fraud continues to be a priority of the Department of Justice and our district.”

This case was prosecuted by Assistant US Attorneys Mark Devereaux and Mac Heavener.