Owner of St. Louis Title Agency to be Sentenced for Role in Fraud
|October 19, 2009|
William C. McKanry is expected to be sentenced this month for his role of a multi-million fraud scheme involving 12 properties in Missouri.
William C. McKanry, former owner of USA Title LLC in St. Louis, pleaded guilty June 25 to conspiracy and fraud charges. His father, William E. McKanry, was convicted earlier this month on similar charges. William E. McKanry owned and operated USA Properties LLC. According to testimony presented at William E. McKanry’s trial, between December 2005 and Jan. 31, 2006, the McKanrys sold 12 real estate properties valued at $2.7 million through Paula Enders, a licensed mortgage broker who operated Foundation Mortgage Inc.
Enders would shop on-line to obtain mortgage financing for all of the 12 properties. On the loan applications for these properties, Enders falsified that the source of the down payments, settlement charges and subordinate finances were to be made by the buyer of these properties, when they were actually made by William E. and William C. McKanry, the sellers of the properties. All closings were made at USA Title in St. Louis County, and documents falsely showed the buyer as making cash payments that were actually made by the McKanrys.
At the closings, Enders received $226,000 above her commission fees as the mortgage broker to buy Foundation Mortgage. On the seller’s settlement statement these monies were falsely represented to be construction rehab costs on the particular properties. Money would be going to Paula Enders at the closings as construction rehab on these properties when they actually were to be used to purchase Foundation Mortgage, Inc. Since the closing on the properties at USA Title, 11 properties ended up in foreclosure and were resold for $1.2 million, for a loss of approximately $1.5 million.
USA Properties maintained and provided a list of their "for sale" properties to area brokers and real estate agents. The list identified the particular property address and corresponding "retail value" and "sale price." In order to sell the properties, USA Properties was willing to sell these properties below the purported appraised value to buyers. This market of favorably priced real estate to which Enders, William C. McKanry and William E. McKanry had access provided an opportunity. By matching USA Properties with buyers, they exploited the difference between what USA Properties was willing to take for a property "sale price" and what a prospective investor, induced by special deals, was willing to pay, i.e., the "spread" or "retail value."
William E. McKanry was convicted of one felony count of conspiracy to commit bank, wire and mail fraud; one felony count of making false statements; four felony counts of wire fraud and three felony counts of mail fraud. The five-day trial was held before United States District Judge Charles A. Shaw.
Conspiracy to commit bank fraud carries a maximum penalty of five years in prison and/or fines up to $250,000; each count of mail and wire fraud carries a maximum penalty of twenty years in prison and/or fines up to $1,000,000 and making false statements carries a maximum of 10 years in prison and/or fines up to $250,000. Restitution is mandatory. Sentencing has been set for Dec. 22, 2009.