Published: March 25, 2008 11:21 pm      

City man indicted in housing-fraud scheme

A Johnstown man is among seven defendants indicted Monday in Sacramento, Calif., in a mortgage-fraud scheme that targeted homeowners in dire financial straits, U.S. Attorney McGregor W. Scott said.

The local man was identified as Keith Brotemarkle, 42, a broker on at least one of the allegedly illegal transactions – although he’s never had been licensed in California, according to the indictment.

The conspirators – in what was described as an “equity stripping” scheme – reportedly netted $5.9 million in stolen equity from 68 homeowners in states nationwide from March 19, 2005, until at least June 30, 2006.

Brotemarkle could not be reached Tuesday for comment.

The U.S. Attorney’s Office said he would be served with a summons notifying him when he is to appear for a bail/detention hearing in California.

The boss of the scheme was Charles Head, 33, of Los Angeles, federal prosecutors contend.

Brotemarkle is the only defendant from Pennsylvania.

In the fraud, strangers were recruited via the Internet to become straw buyers.

The defendants contacted desperate homeowners offering two options to avoid foreclosure and to obtain thousands of dollars up-front for mounting bills. But virtually all of them could qualify only for an option in which an “investor” would be added to the title of the home.

The homeowners then would make a “rental” payment of an amount less than their mortgage payment, thereby allowing homeowners to repair their credit by having the mortgage payments made on time.

“Unfortunately all of this was a scam,” prosecutors said. “The defendants would recruit straw buyers as the ‘investors’ and, oftentimes, these individuals would, in fact, replace the homeowners on the titles of the properties without the homeowners’ knowledge.

“Once the straw buyer had title to the home, the defendants immediately applied for a mortgage to extract the maximum available equity from the home. The defendants then would share (both) the proceeds of the ill-gotten equity and the ‘rent’ being paid by the victim-homeowner,” they said.

When the defendants ultimately would sell the houses, stop making the mortgage payment or pursue an eviction, “the victim-homeowner was left without their home, equity or repaired credit,” prosecutors said.

Brotemarkle was identified in the indictment – handed down by a federal grand jury – as one of the employees in companies created to carry out the scheme. Authorities said he made contact with brokers via the Internet and phone to solicit referrals of homeowners in distress.

In turn, brokers provided contact information for the defendants to homeowners in distress.

For each homeowner that completed a transaction with the defendants, the broker was paid a $4,000 referral fee.

Brotemarkle also solicited the phony buyers, authorities said, who were given $5,000 per transaction. He’s specifically identified as having solicited “B.G.” of Corona, Calif., as a straw buyer.

In the indictment, the defendants are to be charged with mail fraud, conspiracy to commit mail fraud, conspiracy to commit money laundering and other related offenses.

Many of the transactions dealing with deeds, loan applications and money transfers were done by mail or wire, according to the indictment.