MYRTLE BEACH — Mike Wimberly – a California man whose alleged participation in a Myrtle Beach area mortgage fraud scheme helped drive a retired couple into bankruptcy, according to court records – was indicted this week by a federal grand jury on one felony charge of conspiracy to commit wire fraud in connection with a local real estate deal.
A bench warrant for Wimberly’s arrest was issued on Tuesday but he has not yet been taken into custody, court records show.
Wimberly is charged with recruiting straw buyers for area properties and receiving fraudulent payments from real estate closings, including the January 2008 purchase of a five-bedrooom Garden City Beach duplex by California retirees Robert and Carol Riley. The Rileys say they were duped by Wimberly’s false promises of quick riches, and the couple wound up filing for bankruptcy protection when the real estate deal soured.
“That’s the best news I’ve heard in years,” Robert Riley told The Sun News on Wednesday when he learned about Wimberly’s indictment. “He literally ruined our lives. I hope they put him in jail and throw away the key.”
Wimberly could not be reached for comment Wednesday.
The indictment states that Wimberly received payments from real estate closings that either were not shown on HUD-1 closing statements or were misrepresented on the documents. The fraudulent closing documents contributed to RBC Bank’s decision to approve mortgages for the properties, according to the indictment. Wimberly faces a maximum penalty of 30 years in prison and a $1 million fine if convicted.
Robert Riley said Wednesday that he and his wife knew nothing about Myrtle Beach but had credit scores over 800 when Wimberly approached them with a deal to use their good credit to buy investment properties.
“We had a mutual friend who introduced us,” Robert Riley told The Sun News during an earlier interview in 2010. “He [Wimberly] told us that if we would buy the property in our name, we could hold it for a year and then sell it and make a lot of money.”
One of the properties that Wimberly pitched, according to the Rileys, was a duplex on Seabreeze Drive in Garden City Beach. The Rileys purchased the duplex sight-unseen for $885,000 in January 2008 from Stonegate Properties. The real estate closing took place in California.
Kenneth Paul Holmes, the owner of Stonegate Properties, pleaded guilty to mortgage fraud and was released from prison in June after serving a five-month sentence. Holmes, who received a light sentence because of his cooperation with federal investigators, remains on probation and must pay nearly $2.5 million in restitution to banks.
The Rileys signed for two mortgages totaling $801,000 for the duplex. Robert Riley said Wimberly was supposed to make the monthly payments until the property could be flipped and they all could share in the profit.
“He [Wimberly] said, ‘I’ll make you a deal and everybody is going to make some money’,” Robert Riley told The Sun News during a 2010 interview. “It turns out we were nothing but a couple of suckers.”
The flip never came and court documents show just four payments were made on the Garden City Beach duplex.
RBC Bank, which held the largest mortgage on the duplex, filed a foreclosure lawsuit in March 2009. Property records show the duplex was sold in December 2009 at a short sale for $200,000 – less than one-fourth of the price the Riley’s had paid.
The duplex foreclosure was among the lawsuits the Rileys listed on their bankruptcy liquidation petition filed in June 2010. Those bankruptcy documents show the Rileys obtained mortgages totaling nearly $3.2 million on four properties in the Myrtle Beach area during a roughly six-month period starting in July 2007, despite relying solely on $2,195 per month in Social Security payments as income.
The bankruptcy documents indicate that the Rileys knew little about the real estate that was being purchased in their names. For example, a description of the short sale states the Rileys “don’t have any paperwork on this transaction and don’t know the exact terms of the transaction.”
The Rileys received a discharge of their debts in October 2010 but Robert Riley said Wednesday that he and his wife have been financially devastated.
A civil lawsuit filed by RBC Bank against dozens of people accused of participating in area mortgage fraud schemes sheds light on another real estate transaction involving Wimberly and the Rileys – this one for a condominium at Myrtle Beach Villas II in Myrtle Beach.
Documents in that civil lawsuit state that Myrtle Beach Villas II owner Alvin Shuman worked with Wimberly and Myrtle Beach mortgage broker Darin Epps on an allegedly fraudulent transaction in January 2008. Shuman has denied any wrongdoing while Epps currently is serving a prison sentence for mortgage fraud.
The court documents in the civil lawsuit state that Shuman purchased a $41,386.33 cashier’s check that falsely identified Robert Riley as the remitter. That check was used to make the down payment on the condo purchased in Riley’s name.
Myrtle Beach Villas II received a $200,660.78 check from the condo closing, which Shuman deposited into the corporate account at 4 p.m. on Jan. 10, 2008, according to the court documents. One minute later, Shuman transferred $41,386.33 from the Myrtle Beach Villas II account to his personal checking account – thus repaying himself for the down payment he had made on the Riley condo, according to court documents.
One day later, Shuman wired $116,000 to Down to Earth Ventures, a California company controlled by Mike Wimberly. Then, on Jan. 14, 2008, Wimberly wrote a $15,000 check to Riley from the Down to Earth Ventures bank account.
The civil lawsuit filed by RBC Bank is pending in federal court.
Contact DAVID WREN at 626-0281.