Friday, April 08, 2011
Trial for Fraud Begins
By Scott Sandlin
Journal Staff Writer
Kevin Powers arranged home sales and sought out lenders for clients as a real estate agent and mortgage broker in 2006 and 2007, just before the real estate collapse fueled a national economic meltdown.
Whether he intentionally misled lenders or whether lenders looked the other way about the income listed in residential loan application forms will be a question for a jury now hearing the federal wire fraud case against Powers.
Powers is charged with 17 counts of wire fraud involving nine home purchases by six borrowers, as Assistant U.S. Attorney Mary Higgins explained to jurors Thursday in her opening statement. The case is being tried in Albuquerque by visiting U.S. District Judge Richard Webber of St. Louis.
Prosecutors allege Powers carried out a scheme involving the submission of loan applications containing false information about the borrowers' incomes and the purpose of the home purchases, which all but one said was for a primary residence when they actually were bought as investments.
The prospective purchasers were told they could qualify for 100 percent financing, and get money back, if they had good credit, Higgins told the jury. Powers found them financing. He also approached home sellers and told them he had interested buyers, but the sellers needed to raise the purchase price. They did, and at closing an invoice from a construction company owned by Powers, K and E Construction, would appear in the cast pile of closing documents.
That money would be funneled back to the buyers. Powers made money off the sales from fees as the agent and mortgage broker, according to the charges.
"He knew in a very real way that what he was doing was wrong," Higgins said. During the FBI investigation — part of a nationwide hunt for fraud during the 2008 crash — agents spoke to buyers who admitted what they had done. One agreed to wear a recording device.
Powers' attorney, Daniel Tallon, said that Higgins' assertions about what Powers did in the course of selling a home are meaningless unless prosecutors can show he acted with criminal intent.
And in listening to the evidence, he told jurors to view events not in perfect hindsight of 2011, but in the context of how things were operating in 2006 and 2007.
He said his client was a foot soldier in the real estate industry, living and working in Albuquerque to help people achieve their dream of financial security.
Tallon called the lenders "so-called victims" — to objections by Higgins —and said they were in a position to decide who got money and the terms at which that would happen.
"Nothing moved, nobody got paid, not the architect, surveyor, listing agent, selling agent, unless the lenders decided to lend," he said. "They were also in charge of investigating whether the buyers were qualified."
He urged the jury to listen closely for key words and phrases that may be important to determine Powers' intent.
Lenders, Tallon said, didn't have a big stake in the action because they packaged and resold mortgage-backed securities to Wall Street investors.