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U.S. District Judge Ted Stewart noted Thursday that the offenders who stole millions of dollars from mortgage companies in a fraud involving the sale of homes in an upscale Provo neighborhood "are men of stature and status, success and privilege."
So, the judge said, it was a mystery to him why they took part in a conspiracy to steal as much money as possible by using straw buyers to flip houses in the River Bottoms area. The consequences for the mortgage companies, which lost $5.5 million, and residents, whose home values and property taxes were affected, have been devastating, Stewart said.
"It is not too much of a stretch to say this is part of a larger corruption in our society that led to the economic troubles not only in this country, but in the whole world," he said.
One by one, Stewart sentenced five defendants who had functioned in various roles in the scam to prison. All had pleaded guilty to conspiracy or fraud-related counts.
Sentenced Thursday were:
-- Bradley Grant Kitchen, 42, of Provo, whom prosecutors say orchestrated the conspiracy, to 51 months behind bars.
-- David R. Bolick, 52, Sandy, a physician and owner of Home Owners Group and Paragon Investments, 41 months.
-- Ron K. Clarke, 41, Provo, a licensed real estate agent, 41 months.
-- Steve Wells Cloward, 41, Orem, a licensed real estate appraiser, 33 months.
-- Jeffery David Garrett, 44, Provo, an escrow officer, 12 months.
Garrett was ordered to pay $100,000 in restitution. The other four are jointly liable for about $5.4 million to America's Wholesale Lender, which is the wholesale mortgage arm of Countrywide Home Mortgage; and American Broker's Conduit, the wholesale mortgage arm of American Home Mortgage.
A 2007 federal indictment says the defendants entered false sales prices in the Multiple Listing Service, then used the exaggerated figures to support inflated appraisals of other properties in the affluent River Bottoms area. The defendants used straw buyers to flip five residences in the neighborhood, according to the indictment, and kept the difference between the home loan and the actual value of the properties.
The case was the first filed in federal court as part of the Utah Mortgage Fraud Task Force. The group --- made up of local, state and federal law-enforcement officers and state and federal prosecutors -- has brought prosecutions in state courts.
Three of the prosecutions were of straw buyers, including KUTV Channel 2 sports anchor Dave Fox, who admitted he made a misrepresentation to obtain a loan for one of the homes.
Fox entered a plea in abeyance to communications fraud. The case was dismissed and his record wiped clean after he met certain conditions, including cooperating with prosecutors. The other two straw buyers also entered pleas in abeyance in Utah County.
On Thursday, Stewart rejected a request by Garrett's lawyer for a shorter sentence for his client. Attorney David Maddox argued that Garrett had acted as a straw buyer and pointed out that Fox and the other straw buyers had been allowed to make pleas in abeyance.
The argument didn't sway Stewart.
"Why some were not prosecuted ... I don't know," Stewart said. "I consider the role of straw buyers to be reprehensible."
Assistant U.S. Attorney Scott Thorley said Garrett did more than act as a straw buyer.
Meanwhile, Clarke specifically directed his attorney not to ask for a sentence that was shorter than the 41 months, recommended under federal sentencing guidelines.
"I crossed the line," he told Stewart. "I humbly beg for forgiveness."
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