0

Mortgage fraud leader gets 28 years
Gwinnett lenders part of $112M scheme, feds say

ATLANTA - A federal judge sentenced the kingpin of a $112 million mortgage scam to 28 years Friday - signaling the end of a scheme two Gwinnett area lenders helped perpetrate, authorities said.

Phillip E. Hill, 51, of Sumatra, Fla., was convicted of running a massive mortgage fraud scheme in the metro Atlanta housing and condo market from 2000 to 2003. He was also ordered to pay nearly $42 million in restitution.

Hill oversaw conspiracy, fraud and money laundering activity related to mortgages for more than 50 homes and 250 condominiums.

The $112 million operation was the largest of its kind in north Georgia's history, said Patrick Crosby, a spokesman for the U.S. Attorney's Office.

"It is highly likely that this case is one of the largest in the country in the federal system," Crosby said.

Two lenders with ties to Gwinnett helped Hill dupe homebuyers into fraudulent loans, according to court documents. Both have pleaded guilty to charges related to the scheme.

Evidence at trial showed the loan officers - one from Suwanee, the other from Stone Mountain - received excessive fees for processing the fraudulent loans.

Wendell Higgs, 42, of Suwanee, awaits sentencing for fraud, and no court date has been set, said Crosby.

The second lender, Michael Flake, 31, of Stone Mountain, was sentenced to more than three years in federal prison. He was also ordered to pay restitution of more than $769,000, said Crosby.

Seven co-defendants went to trial with Hill and were also found guilty of multiple felony charges.

Hill was the owner of numerous Georgia corporations, including "We Build Atlanta Inc." and "Estate Artisans of Georgia Inc.," according to court documents.

Hill sold the roughly 300 Atlanta-area properties he owned to "straw purchasers," who applied for mortgage loans based on fraudulently inflated prices, creating what authorities call a "mortgage flip."

The straw purchasers would then get a kickback of the excess loan proceeds. Some of the properties were "flipped" more than one time, documents show.

"(Hill's scheme) resulted in multi-million dollar losses to lenders and had an even more devastating impact on individual homeowners, neighborhoods and communities," said U.S. Attorney David E. Nahmias. "Such criminal conduct will be prosecuted aggressively and punished severely."