Conviction In Davenport Real Estate Fraud Case - News and Weather For The Quad Cities -

Conviction In Davenport Real Estate Fraud Case

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Another person has been convicted of charges in a real estate scheme in the Quad Cities. 60-year-old Marc Robert Engelman of Davenport was found guilty Tuesday of two counts of bank fraud, six counts of wire fraud, and one count of conspiracy.

According to a news release from United States Attorney Nicholas A.

Klinefeldt, Engelmann was accused of participating in a scheme to defraud banks and lenders during 2005 and 2006 in nine mortgage loans.

The overall scheme involved some 30 properties, mostly multi-unit rental properties, in

the Davenport area purchased by Darryl Hanneken and Robert Herdrich. Most of the properties were located in the Americana Park (Goose Creek Heights) neighborhood. The evidence at trial showed that Engelmann--along with other individuals, including real estate agent Mary Pat Harper and a mortgage broker--assisted Hanneken and Herdrich in carrying out a dual contracts scheme to defraud banks and mortgage lenders.

Under this scheme, Hanneken and Herdrich would agree to buy a property for a given

price and then propose to the seller that the transaction paperwork reflect a bogus, higher price. An appraiser would furnish an inflated appraisal targeted to meet the bogus, higher price. After closing of the transaction, the seller would pay a kickback to Herdrich and Hanneken representing the difference between the actual, lower price and the bogus, inflated price. The lender, unaware of the actual, lower price and therefore deceived about the true value of the property, would loan Herdrich and Hanneken more money than the property was worth.

Engelmann, a real estate attorney, assisted in completion of nine of the property transactions. Hanneken and Herdrich defaulted on almost all the mortgage loans, in most cases without making one payment. They borrowed over $3.7 million and received almost $900,000 in postclosing kickback payments. Even after banks and lenders sold the properties to recoup the money loaned, they still suffered over $1.2 million in losses.

Others charged in connection with the scheme include Hanneken and Herdrich, who were

sentenced to 40 months imprisonment each. Mary Lee Reinking and Natalie Long, both formerly mortgage brokers with Crow Valley Mortgage, pleaded guilty to felony mortgage fraud charges in connection with two of the transactions and were sentenced to probation.

Paul Bieber, another attorney, pleaded guilty to misprision of felony, a felony offense, and is awaiting sentencing. Mary Pat Harper, a real estate agent, pleaded guilty to felony mortgage fraud charges and is also awaiting sentencing.

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