California man gets five years for role in Myrtle Beach area mortgage fraud scheme
07/23/2014 10:59 PM
07/23/2014 11:01 PM
A California man who recruited straw buyers for a Myrtle Beach area mortgage fraud scheme has been sentenced to five years in prison, according to federal court records.
Michael Lewis Wimberly, 47, of Gardena, Calif., pleaded guilty earlier this year to one felony charge of wire fraud. He was sentenced this week in Florence by Judge Bryan Harwell.
In addition to the prison sentence, Wimberly will be on three years of probation following his release and must pay nearly $1.7 million in restitution to banks that lost money on the real estate deals he helped arrange. Wimberly is appealing his sentence.
Prosecutors say Wimberly conspired with a network of Myrtle Beach area criminals to sell vacation properties at inflated prices to straw buyers and then split the profits from the mortgage proceeds. Most of those homes went into foreclosure after the buyers made a few or no payments, costing RBC Bank and other financial institutions millions of dollars.
Wimberly was paid from the proceeds of real estate closing, court documents show. Those payments were not disclosed to banks on HUD-1 closing statements or were misrepresented on those statements.
One of the properties Wimberly pitched was a duplex on Seabreeze Drive in Garden City Beach. California retirees Robert and Carol Riley bought that property sight-unseen for $885,000 in January 2008 from Stonegate Properties.
Kenneth Paul Holmes, the owner of Stonegate Properties, spent five months in prison in 2012 for his role in the mortgage fraud scheme.
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. Property records show the duplex was sold in 2009 at a short sale for $200,000 – less than one-fourth of the Rileys’ mortgage amount.
The duplex loans were among four mortgages totaling $3.2 million the Rileys obtained for Myrtle Beach area homes they had never seen. All of the properties went into foreclosure and the Rileys filed for bankruptcy liquidation in 2010.
“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.”
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