3/20/2011 7:05:00 AM

http://verdenews.com/main.asp?SectionID=1&SubSectionID=1&ArticleID=40964

PHOENIX - U.S. Attorney Dennis Burke has announced two indictments charging 12 Arizonans, including one person from Sedona, with involvement in multi-million-dollar mortgage fraud conspiracies. Between the two cases, the defendants fraudulently obtained more than $19 million in loans and more than $5 million in "cash back" loan proceeds. The defendants are charged with various counts of conspiracy, conspiracy to commit wire fraud, wire fraud, aggravated identity theft, money laundering and conspiracy to commit transactional money laundering.

"These two prosecutions - and others we are pursuing - will demand accountability from a mortgage industry gone adrift, causing great stress to our economy," said U.S. Attorney Dennis K. Burke. "We are focused like a laser beam on investigating and prosecuting those who commit mortgage fraud, particularly including the industry professionals who knowingly facilitated it."

The investigations in these indictments were led by agents from the Internal Revenue Service and the FBI.

"Mortgage fraud has contributed to the collapse of our real estate market in Arizona," said Dawn Mertz, Special Agent in Charge, Internal Revenue Service, Criminal Investigation. "IRS CI will continue to aggressively pursue those individuals who commit these types of crimes."

The 13-count indictment alleges that the defendants submitted false loan applications to banks and other lending institutions to buy numerous residential properties in a short period of time, lying about the borrowers' income and liabilities in order to get financing of more than $5.5 million. The indictment also alleges that the defendants profited from the scheme by artificially increasing the sales price of the properties and then directing portions of the loan proceeds back to themselves for their own personal use, while concealing this information from the lenders. The indictment alleges over $2.5 million in loan proceeds were directed back to the defendants during a single five-month period.

The defendants charged in various counts of the indictment are: Clint Rogers, 37, of Scottsdale; Angela Rogers, 31, of Scottsdale; Shannon Kato, 40, of Sedona; Ernest Babbini, 55, of Scottsdale; and Drew Hull, 30, of Prescott. Clint Rogers, Angela Rogers, and Shannon Kato were arrested, and Ernest Babbini and Drew Hull have been served with a summons to appear in federal court.