Atlanta man pleads guilty to mortgage fraud

LAWRENCEVILLE - An Atlanta man pleaded guilty Monday to a mortgage fraud scheme targeting properties in Gwinnett and DeKalb counties.

Charlie Smith was sentenced to three months in confinement followed by six years and nine months probation for one charge of residential mortgage fraud. He was also fined $1,000 and ordered to pay restitution to the victims, Fremont Investment and Argent Mortgage.

According to the state attorney general's office, Smith used fraudulent home appraisals to overinflate the value of a property and then took out bank loans for the inflated amount. The fraud ring also employed fake mechanic's liens on the property to suck more money out at closing, claiming it was owed for work on the house which had never really been done.

The alleged ringleader in the mortgage fraud scheme was Jason Edward Brenner. Brenner recruited Charlie Smith to line up "straw buyers" for the targeted properties, said State Attorney General Thurbert Baker in a prepared statement issued Monday.

After closing, the fraud ring reportedly pocketed the money from the bank. The bank was left to foreclose on properties which were worth a fraction of what had been loaned out.

Baker drafted the Residential Mortgage Fraud in 2005 to combat mortgage fraud rings targeting Georgia neighborhoods. The legislation, which went into effect in May 2005, allows prosecutors to target mortgage fraud rings for prosecution.

Mortgage fraud, if left unchecked, can result in higher interest rates for consumers as banks raise their rates to cover losses from fraud. It can also cause higher property taxes as county assessors plug in the overinflated values of mortgage fraud properties into setting comparable values for other homes in an area. Many neighborhoods report increased crime after drug rings move into abandoned fraud properties.

Smith has agreed to testify against Brenner, however Brenner failed to appear for trial in August 2006. There is a bench warrant out for his arrest.

Brenner is charged with three counts of Residential Mortgage Fraud. Anyone who has information of Brenner's whereabouts is asked to call Gwinnett police Detective Amanda Cain at 770-513-5366.