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If you are still selling drugs - your stupid - Mortgage fraud is the thing

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  • If you are still selling drugs - your stupid - Mortgage fraud is the thing

    http://www.chicagotribune.com/news/special...ll=chi-news-hed

    Opening

    Scams build gang empire
    Reputed gang leader Marvel Thompson controlled real estate as well as drugs. What was his secret weapon? Mortgage fraud.

    By David Jackson
    Tribune staff reporter
    Published November 7, 2005



    From his second-story office in a grimy South Side commercial building, crime lord Marvel Thompson kept watch over his turf.

    The reputed king of the Black Disciples street gang relied on beatings, murder and mayhem to control drug-selling corners across the South Side, prosecutors allege.

    To lock in territory, the 36-year-old Robeson High School dropout also deployed a more sophisticated weapon: mortgage fraud.

    Over the course of a decade, Thompson used straw buyers, sham sales and phony identities to secure more than $1 million in mortgage loans that went unpaid, records and interviews show.

    The Black Disciples' expert use of mortgage fraud signals a menacing development. Once confined to a relatively small group of swindlers, mortgage fraud has morphed into a method of supporting ongoing criminal enterprises such as drug-dealing, smuggling and prostitution, records and interviews show.

    Thompson acquired vacant lots, single-family homes and hulking apartment buildings that wrapped around corners where his gang dealt crack and heroin. Gang functionaries lived in some buildings and used others to store drugs and weapons and to stage operations, the Tribune found.

    Thompson and a circle of criminal associates used the property to sop up lucrative bank loans. And they collected hundreds of thousands of dollars more from U.S. government Section 8 checks that are supposed to go to landlords to subsidize the rents of poor families.

    Similar schemes have cropped up in the Chicago area and across the country, court records show.

    A coast-to-coast methamphetamine ring based in the southwest suburbs--known to prosecutors as the Esawi organization--used mortgage fraud to launder drug profits. Traveling Vice Lord Marc Roberson, a convicted cocaine dealer, worked with a swindling crew to secure mortgage loans on two ramshackle West Side homes.

    But few of the operations appear as fully evolved as Thompson's. By May 2004, when he was indicted on federal drug conspiracy charges, Thompson controlled at least 15 South Side properties, the Tribune found. Most were clustered within a half-mile of his headquarters at 6901 S. Halsted St. in the Englewood neighborhood.

    From there, Thompson kept track of his land portfolio using an HP Vectra computer tower equipped with IBM Red Brick Warehouse business software, search warrant receipts show. Two handguns were tucked nearby.

    Thompson pleaded guilty to federal drug conspiracy charges in March but denied being the gang's leader in a court statement. He awaits sentencing and faces 10 years to life in prison. Thompson and his attorneys declined to comment. His collection of South Side properties was the fulfillment of a stubborn dream. Aided by a cadre of lawyers, accountants and mortgage brokers, Thompson began buying buildings in the early 1990s, soon after he allegedly assumed leadership of the gang.

    A dope supplier introduced Thompson to a real estate broker and loan officer who helped him "start a corporation to facilitate the purchase of real estate in order to launder drug money," federal prosecutors wrote in 2004 court papers. "Thompson wanted to use [secret land trusts] to obtain legitimate bank loans."

    In the hands of an honest investor, Thompson's properties could have been worth millions of dollars and might have kindled development in a swath of Englewood struggling to rebuild.

    Instead, they became ravaged, dangerous shells.

    Secret land trusts

    To understand how dubious mortgages helped generate cash for Thompson and extend his gang's dominion, consider the three-story, 15-unit courtyard apartment building at 6723-29 S. Parnell Ave.

    Thompson bought the building in a 1995 tax auction, although patchy county land records don't show how much he paid. He then titled the property to a secret land trust using an Illinois law that allows property owners to withhold their identities from public records.
    Turning the other cheek is better than burying the other body.

    Official Sport Lounge Sponsor of Rhode Island - Quincy Jones - Yadier Molina who knows no fear.
    God is stronger and the problem knows it.

    2017 BOTB bracket

  • #2
    Part 2

    << previous Assisting Thompson in these transactions was attorney Peter Loutos, who helped Thompson acquire at least three other properties using secret land trusts, the Tribune found.

    Loutos, 73, pleaded guilty to an unrelated investment swindle last year and gave up his law license. He declined to comment for this article.

    In 1998, three years after Thompson's land trust acquired the Parnell Avenue building, Thompson sold it to an associate for $315,000.

    On paper, at least.

    The supposed buyer, a woman named Dishawn King, was the mother of one of Thompson's daughters, court records show.

    King listed her occupation in court records as manager of Thompson's Royal Improvement Ltd. That company sponsored "courtesy patrols" in the Englewood neighborhood, the documents said, and was the employer Thompson and Black Disciples associates listed to show court authorities they held legitimate jobs.

    King, 40, has not been charged with any crime, and she declined to comment.

    After Thompson purportedly sold King the Parnell building in 1998, she used it to secure a $252,000 mortgage loan that went unpaid. It is unclear where that money ultimately ended up, but in a typical mortgage, it would have gone to the seller, Thompson.

    But Thompson apparently kept his hold on the building. "Thompson, along with his mother, have retained control over that property," an FBI agent wrote in a 2004 court affidavit.

    The FBI affidavit cited evidence of Thompson's hidden ownership.

    Even after he supposedly transferred the building to King, Thompson stated that he owned the property when he collected $54,941 in U.S. Department of Housing and Urban Development Section 8 payments from October 1999 through March 2004. Thompson said he was the landlord of two government-subsidized tenants there.

    On his federal income tax returns for 1999 and 2000, Thompson reported owning the Parnell building and listed income and expenses related to it, the FBI found.

    The tax preparer who compiled Thompson's tax filings for a decade--and also prepared King's tax returns in 1999 and 2000--explained to FBI agents Thompson's strategy for concealing his ownership.

    Thompson sold the building to King, the accountant told the FBI. Then Thompson bought it back from her without registering the second sale with the Cook County recorder of deeds.

    Adding to the evidence that Thompson still controlled the building was the fact that his mother managed it, even after King took title. Arlether Branch raised Thompson and three siblings as a single mother, then worked for his Royal Improvement as a property manager. She was not charged with any crime, and she did not respond to requests for comment.

    When federal agents arrested Thompson on drug conspiracy charges, they searched two apartments he and his mother used in the building. Authorities found bundles of U.S. currency totaling $313,000, a notebook containing "The Black Disciple Nation Laws" and a box of .380-caliber ammunition.

    Thompson, the alleged Black Disciples leader, maintained a third apartment's electrical service under the name "Unit BD."

    An August 2004 city housing code inspection found cracked mortar and loose brick on the building's exterior. Inspectors reported that they couldn't get inside.

    Trusted gang members knew the secret. They knocked on an outer door to be led down a set of stairs into the basement, then through a wooden door on the right side of a hallway. There, Thompson had installed a two-room recording studio, court records show.

    From a radio antenna on the roof, the Black Disciples broadcast across the South Side by hijacking the frequency of a Christian station.
    Turning the other cheek is better than burying the other body.

    Official Sport Lounge Sponsor of Rhode Island - Quincy Jones - Yadier Molina who knows no fear.
    God is stronger and the problem knows it.

    2017 BOTB bracket

    Comment


    • #3
      Part 3

      Amid uncensored rap, the gang sent out messages like the one from Sept. 29, 2003: "There was serious surveillance on Parnell, didn't tell us where, just called it in. It was unsuccessful."

      Learning the game

      In addition to Thompson's 15 properties, his criminal associates bought property alongside his and used it to obtain mortgage loans.

      Wholesale drug supplier Willie Diggs owned four nearby South Side parcels, including one used as a key safe house in Black Disciples drug operations, land and court records show. Diggs used his buildings to collect $365,700 in mortgages that he didn't repay, as well as $64,376 in Section 8 vouchers, the Tribune found.

      It's not clear how much of that money Diggs pocketed, or how much he churned into property purchases. Charged in a separate pending federal narcotics case, Diggs did not respond to requests for comment.

      An unnamed associate bragged to federal agents about teaching Diggs how to buy property, use mortgage loans and rent profits to acquire drugs, then buy another piece of property and deal more drugs.

      "This was the best way to do it," the associate told an undercover federal agent.

      Jerry Fort, a convicted drug dealer who helped Diggs acquire a building used for drug dealing by the Black Disciples, controlled an additional nine properties that garnered $571,000 in mortgages and $181,657 in Section 8 vouchers, the Tribune found. Fort was not charged in the Black Disciples case, and he declined to comment.

      A former county employee named Generall J.G. Voker II was convicted of helping the Black Disciples launder profits from the sale of heroin and crack. He owned properties on the South Side and in Kankakee County and Arizona, land records show.

      Voker was not a Black Disciples member, but his 33-year-old twin sons were mid-level gang leaders who washed drug profits through their father, prosecutors alleged.

      Voker also was a veteran employee of the Cook County Management of Information Systems department, which helps prepare property tax bills, according to public records.

      Sentenced to 5 years probation for the money laundering, Voker declined an interview request.

      Eviction notices

      Mortgages were not the only income Thompson squeezed from his properties.

      He leased dozens of shabby apartments to single mothers who paid only a small portion of their rent. The federal Section 8 program paid the rest, giving Thompson at least $276,951 in housing choice vouchers from January 2000 through December, records show. Thompson got about $13,250 of that money after his May 2004 indictment.

      Thompson evicted at least 41 slow-paying tenants from his properties between 1998 and last year.

      In nine of those cases, Thompson's mother and property manager successfully petitioned Cook County Circuit Court judges to appoint special process servers who presented tenants with court notices. Those servers were Black Disciples, the Tribune found.

      Among them was Thompson's half-brother Curtis "Bay-Bay" Branch, who served state prison stints for drug dealing and for concealing a murder fugitive.

      In seven cases, eviction notices were served by Burnie Williams, who has served probation for felony drug delivery charges and a misdemeanor weapons arrest.

      When Thompson's mother filed court petitions asking judges to approve special process servers, Thompson was able to help her. He affirmed her signature using an Illinois notary stamp granted to him by the secretary of state in 1997.

      Neighborhood suffers

      Eleven of the 15 Thompson properties traced by the Tribune were cited for dangerous housing code violations. Four were demolished after judges ruled that they were public hazards.

      At Thompson's headquarters building at 6901 S. Halsted St., city inspectors cited broken plaster, peeling paint, smashed windowpanes, rotted window frames and rats.

      Activity at the building also drove up crime in the neighborhood.

      From 1999 through 2003, police made 12 felony drug-dealing arrests on the corner dominated by Thompson's headquarters.

      A 24-year-old woman convicted of drug dealing outside the building lived in a second-floor apartment there, police and court records show. A 29-year-old Black Disciple was convicted of selling 34 zip-lock bags of marijuana from the corner.

      And police investigated 78 crimes on the block between 1999 and 2003, including 11 involving guns.

      The street crime all but vanished after Thompson was indicted in May 2004. Police records list only one battery and one assault on the block in the final seven months of 2004.
      Turning the other cheek is better than burying the other body.

      Official Sport Lounge Sponsor of Rhode Island - Quincy Jones - Yadier Molina who knows no fear.
      God is stronger and the problem knows it.

      2017 BOTB bracket

      Comment


      • #4
        Great idea. Except that banks don't fuck around when you don't pay them back. I'd gather that they are more ruthless than the Black Disciples in question.

        Moon

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        • #5
          Kinda neat that it's still possible to live out New Jack City-esque fantasies...
          . . . and to tell you this: I work with gays, have friends who are gay, go to church with gays. Most of them are aware that I believe that homosexual behavior is sin. Some of them actually agree. Most don't. It's OK . . . because they also know or at least have been made aware of my multitude of sins: adulterous heart, lustful and covetous behavior, wicked pride, angry spirit . . . do I need to go on?
          -mike
          mike smith, post-dispatch online sports editor

          Comment


          • #6
            Black collar crime is killing this country
            Official sponsor of Mike Shannon's Retirement Party

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            • #7
              Many funny and tragic points here.

              One - maybe that's why some neighborhood stays in a state deteroration -

              Two - building a radio station in the basement of an abadoned building and hi jacking a christian radio signal to broadcast gang information.

              Three - I have to believe that there were a few cops and politicians on the take too.
              Turning the other cheek is better than burying the other body.

              Official Sport Lounge Sponsor of Rhode Island - Quincy Jones - Yadier Molina who knows no fear.
              God is stronger and the problem knows it.

              2017 BOTB bracket

              Comment


              • #8
                QUOTE(Moon Man @ Nov 8 2005, 08:14 AM) Quoted post

                Great idea. Except that banks don't fuck around when you don't pay them back. I'd gather that they are more ruthless than the Black Disciples in question.

                Moon
                [/b][/quote]

                well you are correct to an extent. the fact is that with good lawyers, a person can stave off eviction and forclosure for a long long time. plus, once the bank actually finds out that their collateral is worthless, it also changes the direction of the attack. in all likelihood, the loan officer that signed the loan, the appraiser and the underwriter would be pursued harder than the borrower. that said, you are right, the borrower wont get away with it........unless he pays the bank back with another straw loan.

                back in the mid 80's i worked for a large equipment leasing company and my job was evaluating equip values for the leases as the leases came to end positions. occasionally i would be brought in on collection issues when collateral value was in question.

                we had a lease where the guy had gotten a lease from our company with a room of junk. come to find out, the lessee, the equipment "manufacturer" and our leasing sales rep were all in on it. through some investigation we found that the lessee and equip sales company had done this 3 times before. in each case after ceasing to make payments, and their little charade was discovered, they found a new leasing company to buy them out and then they would settle with the previous leasing company for a marginal amount in return for no charges. for all i know they are still doing it. the lender doesnt want to get involved. they just want to minimize their loss and move on. there is no profit in putting the guy in jail. i dont agree with this, but i think it is realistic.
                Roy Mueller

                "It's kind of fun to do the impossible."

                - Walt Disney

                Comment


                • #9
                  Damn, thats interesting. If those guys can buy apartment buildings and other real estate, why the hell couldnt I or anyone else?

                  I should be doing what those guys are doing. Seems so much more interesting and exciting than my life. At least till I'm busted, anyways...
                  “I’ve always stated, ‘I’m a Missouri Tiger,’” Anderson said March 13 after Arkansas fired John Pelphrey, adding, “I’m excited about what’s taking place here.”

                  Asked then if he would talk to his players about the situation, he said, “They know me, and that’s where the trust comes in.

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                  • #10
                    BillikenRoy, how long does a person know when they are going to lose their house? We had a poor friend that lost her husband to cancer with 4 grown kids and lost her house when she came home from work one day and all her belongings were on the front lawn. The two high school age girls found this before the mom got home from work. We wondered why she didn't just sell the house to get out from under the debt and at least get something for the house. We don't know all the details but she had to have some kind of warning before just losing it outright.
                    RIP Stan the Man
                    The StL Blues will NEVER win the Stanley Cup. I repeat, NEVER!
                    I miss TLR!

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                    • #11
                      QUOTE(Razzy @ Nov 8 2005, 09:33 AM) Quoted post

                      Damn, thats interesting. If those guys can buy apartment buildings and other real estate, why the hell couldnt I or anyone else?

                      I should be doing what those guys are doing. Seems so much more interesting and exciting than my life. At least till I'm busted, anyways...
                      [/b][/quote]


                      cant do it by yourself. you have to have a dirty appraiser, a dirty loan officer and possibly an underwriter in your pocket as well.

                      then you have to have an exit plan. i.e. have another straw deal ready to go to get the money to get out of the other one or else give you the cash to make the payment on your actual worthless property.

                      granted this guy had some income coming in from a few low income rental units, but likely even that and the section 8 money would not be enough to make the payments. thus he had to keep refinancing these cheat deals to gather cash to make the payments. that means his partners had to be in for more fraud as well. it is as complicated and deep of a straw deal that i have read about in a long long time. this guy was good, but eventually they have to tumble.
                      Roy Mueller

                      "It's kind of fun to do the impossible."

                      - Walt Disney

                      Comment


                      • #12
                        QUOTE(billiken_roy @ Nov 8 2005, 10:39 AM) Quoted post



                        cant do it by yourself. you have to have a dirty appraiser, a dirty loan officer and possibly an underwriter in your pocket as well.


                        [/b][/quote]

                        the first two are very, very commonplace/easy to access these days...a dirty underwriter is not necessary, because loans are "sold" - in massive aggregation - to bigger entities...
                        The Dude abides.

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                        • #13
                          Also remember - these guys didn't have to not make the payments - I am sure with the drug money they could have made the payments easy -
                          Turning the other cheek is better than burying the other body.

                          Official Sport Lounge Sponsor of Rhode Island - Quincy Jones - Yadier Molina who knows no fear.
                          God is stronger and the problem knows it.

                          2017 BOTB bracket

                          Comment


                          • #14
                            QUOTE(jhuegy @ Nov 8 2005, 09:37 AM) Quoted post

                            BillikenRoy, how long does a person know when they are going to lose their house? We had a poor friend that lost her husband to cancer with 4 grown kids and lost her house when she came home from work one day and all her belongings were on the front lawn. The two high school age girls found this before the mom got home from work. We wondered why she didn't just sell the house to get out from under the debt and at least get something for the house. We don't know all the details but she had to have some kind of warning before just losing it outright.
                            [/b][/quote]


                            the owner would have gotten notices. in fact the court would have insisted they had proof they rec'd default notification and sufficient time to "cure" the deficiency. i.e. my guess is that pride kept those people from admitting to friends and neighbors it had gotten that bad.

                            as to selling the house, one would think that makes sense. but likely either emotions or other debts got in the way. emotionally, especially after a death, i bet it is hard to walk away from your greatest asset with the most memories attached.

                            debt wise, these days people finance to the gills. it isnt uncommon for homes to have little or no equity and whatever equity might be there would be eaten by legal and closing costs. thus making a sale difficult.

                            the absolute worst thing someone can do is not communicate with the lender. sure the lender isnt going to cut you much slack, but at least you know the time frames and limits and maybe it will make you make those difficult decisions that might save you money in the long run.

                            i am all for home ownership, but to be honest, the trend of the industry for less equity needed for a mortgage loan is dangerous. especially if coupled with looser standards for income, credit and debt ratios. the truth is all those concessions come with a price that makes it sensible for the industry, but once in awhile that doesnt equate to the right thing for the buyer. the number of people i see everyday living virtually paycheck to paycheck with huge houses and debt with big jobs is incredible.

                            if anything, it makes disability and life insurance more of a necessity than ever before and i bet more people are also under insured than in the past as well.
                            Roy Mueller

                            "It's kind of fun to do the impossible."

                            - Walt Disney

                            Comment


                            • #15
                              QUOTE(Moe_Szyslak @ Nov 8 2005, 10:30 AM) Quoted post

                              QUOTE(billiken_roy @ Nov 8 2005, 10:39 AM) Quoted post



                              cant do it by yourself. you have to have a dirty appraiser, a dirty loan officer and possibly an underwriter in your pocket as well.


                              [/b][/quote]

                              the first two are very, very commonplace/easy to access these days...a dirty underwriter is not necessary, because loans are "sold" - in massive aggregation - to bigger entities...
                              [/b][/quote]

                              depends on the set up of that lender. some lenders underwriter their own loans and then securitize or sell the mortgages straight to fannie or freddie and then service the loan themselves. until there is a problem, no outside underwriter would ever see that loan. i understand that isnt "necessary", that is why i said "possibly" in my intial statement. it all depends on the lender's set up.
                              Roy Mueller

                              "It's kind of fun to do the impossible."

                              - Walt Disney

                              Comment

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