Sentencing postponed for former Conway manufactured home dealer

A sentencing hearing for former Conway manufactured home dealer Glenn Vaught, who pleaded guilty last year to a felony mortgage fraud charge, was postponed Wednesday after mortgage broker Nancy Kennedy showed up in the courtroom to testify against him.

Judge Bryan Harwell has not rescheduled a sentencing date for Vaught and his co-conspirator, former mortgage broker Michael Fortenberry, each of whom were in federal court in Florence to receive possible sentences of up to five years in prison and a maximum of $250,000 in fines.

Kennedy claims Vaught duped her into helping him file five mortgage applications with falsified information on them. Vaught then coerced her into filing two more applications, telling her it was the only way buyers who had been cheated in the scheme could get their homes, she said.

Kennedy spent years helping the FBI build a case against Vaught. The agency then used information Kennedy had provided to file felony charges against her.

Kennedy told The Sun News last week that she planned to attend Vaught’s court hearing to counter church members who were going to be there as character witnesses for Vaught. When lawyers recognized her in the courtroom, however, they conferred with Harwell and the hearing was postponed.

“My attorney told me I was not allowed to speak because anything I said could be used against me,” Kennedy said. “I wanted to speak because that man has destroyed my life.”

John Potterfield – the assistant U.S. attorney who is prosecuting Vaught, Fortenberry and Kennedy – declined to comment on Wednesday’s court decision. Nicholas Lewis, the lawyer representing Vaught, could not be reached for comment.

Sentencing for Vaught and Fortenberry likely will be postponed until after Kennedy’s trial, which is scheduled to start with jury selection on March 1.

Kennedy is facing one charge of making false statements on a loan application, a felony that carries a harsher sentence – up to 30 years in prison and a $1 million fine – than what Vaught and Fortenberry are facing. Kennedy pleaded not guilty to the charge in September and is free on a $30,000 unsecured bond. The court has appointed a public defender to represent her.

The FBI says Kennedy signed off on a loan application stating that a borrower had $12,000 in assets when she had not verified that the assets really existed. Kennedy said the loan was a “stated asset” loan – a common bank program at the time in which borrowers did not have to prove they had the income or assets they listed on their applications. Kennedy said she is being prosecuted for doing exactly what the bank wanted her to do – submit a loan application based solely on the borrower’s word.

Kennedy told The Sun News that she feels betrayed by the FBI agent that she helped and that she wants to make sure the court does not fall for Vaught’s “good old boy, country Christian act.”

About 40 members of Vaught’s church showed up at Wednesday’s hearing, Kennedy said, and church members have sent letters to Harwell in recent weeks stating that Vaught “has turned his life around” and “has been rehabilitated through Christ.”

Lewis filed court documents Tuesday asking Harwell to give his client a light sentence.

“Glenn is married and is solely responsible for supporting his disabled wife and their 12-year-old child,” Lewis said in the court documents. “Glenn also helps support two of his older children and a grandchild, all of whom reside with him. A lengthy prison sentence for Glenn would be detrimental to his family’s ability to financially survive.”

Lewis also asked Harwell to consider house arrest for Vaught instead of imprisonment.

Kennedy said she was not concerned about possible consequences from testifying against Vaught prior to her own trial.

“I don’t care about myself any more,” she said. “I just want to make sure he gets the maximum possible.”

Vaught – the former owner of the now-closed G&E Home Sales on U.S. 501 in Conway – and Fortenberry took part in a mortgage fraud scheme that cost two banks more than $1.5 million during last decade’s housing boom. By the time those banks obtained a court-order to freeze the men’s bank accounts, only $14,199 was left, according to documents in a related civil lawsuit.

Vaught and Fortenberry admitted they falsified information on loan applications to influence mortgage lenders to make loans that otherwise would not have been approved. The falsified information included inflated home appraisals, doctored bank statements and phony down payments, according to documents in the civil lawsuit.

Vaught was supposed to order manufactured homes for his buyers and then close on the loans after the homes were set up on land and ready to occupy. Instead, Vaught told banks the homes were ready even though they had not yet been ordered. He had appraisals showing doctored photos of property with homes that didn’t really exist to back up their stories, according to documents in the civil lawsuit.

Buyers have said they had no idea Vaught was submitting fraudulent loan applications in their names. They were not able to get conventional financing and simply trusted Vaught’s promise to put them in a home.

When the loans closed, according to documents in the civil lawsuit, Vaught and Fortenberry kept the money instead of purchasing homes for the buyers. That left buyers with 30-year mortgages for homes that did not exist.