01252012 - News Article - Housing fraud co-defendant explains scheme

Housing fraud co-defendant explains scheme

Post-Tribune (IN)
January 25, 2012

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A Schererville woman testified Tuesday about how she and seven other co-defendants used their knowledge that Gary housing prices in 2005 and 2006 were inflated by 400 percent to rake in almost $650,000 in a mortgage fraud scheme. 

Sheila Chandler, who has pleaded guilty in the case, also spoke about Randall Causey’s role in the scheme. Causey, 47, is on trial at the U.S. District Court in Hammond on charges of conspiracy to commit wire fraud and wire fraud. 

Chandler said she first learned how to commit fraud as a mortgage originator almost from the start. 

“In the beginning, we were told the lenders didn’t check anything,” Chandler said about the loan applications. 

Fraud became so widespread, Chandler said, that about 90 percent of the mortgage applications she processed included fraud. A handful of others at the mortgage office she worked at, Challenge Mortgage, and another office all took part in it, she said. 

She and others would provide fake financial documents so buyers who normally wouldn’t be approved could get loans to buy rental properties. She worked with Gordon Rainey, who co-owned Netlink Construction with Causey, to find buyers for properties in Gary and Merrillville, usually people who had no knowledge of how real estate transactions worked. 

Chandler said she knew housing market prices in Gary were inflated from talks with local businessman Jerry Haymon , who has pleaded guilty in a similar case. 

“He told me he controlled the market in Gary,” she testified. 

Chandler and the others knew they could manipulate the prices of other homes by having their appraisals done in comparison to the other homes that were sold at inflated prices. All it took were three homes within a 2-mile radius sold for more than they were worth to justify the exaggerated price of another home. That’s how a home that Lake County had assessed for $20,000 could sell for $80,000, she said. 

“Gary had a really volatile market,” Chandler said. 

She used that information to find houses for the buyers to purchase. Causey found the buyers, she said, because he was known as a charmer. She admitted she did not talk to him during most of the scheme, though, and that most of what she knew about Causey during that time came from talks she had with Rainey.