DAVENPORT, Iowa––A crime ring that made bogus deposits has been busted in Iowa, a former teller has been sentenced to prison for embezzlement, and a former Fannie Mae employee who used duffel bags full of cash as part of a multi-million-dollar fraud and kickback scheme is also on her way to jail.
In Davenport, Iowa, police have arrested two more people in connection with a conspiracy to defraud a Vibrant Credit Union, bringing the number of arrests in the case to six.
The Quad City Times reported the two men arrested have been charged with one count of second-degree fraud and one count of conspiracy to commit a non-forcible felony. Both the charges are Class D felonies under Iowa law that carries a prison sentence of five years. They charge four other people allegedly connected to the fraud and charged with similar crimes.
The investigation began in September of 2019 when police were sent to Vibrant Credit Union regarding fraudulent bank accounts and activities connected to them, the Quad City Times said, citing an arrest affidavit that alleges members of the conspiracy would open an account and then place empty envelopes into automated teller machines in the area and declare the envelopes contained cash deposits.
“They would then immediately make a cash withdrawal, draining the account. They continued this practice until the account was frozen, at which time one of them would open a new account and the process of false deposits and cash withdrawals would continue,” the affidavit states.
Ex-Teller Sentenced
In Huntington, W.V., a former employee of West Virginia credit union, Frances McComas, has been sentenced to federal prison and ordered to pay restitution after earlier pleading guilty to embezzlement.
According to U.S. Attorney Mike Stuart, McComas, 56, admitted to embezzling $165,500 from the West Virginia FCU. U.S. District Judge Robert C. Chambers sentenced her Monday to serve one year and one day in prison and five years of supervised release.
McComas admitted she took the money from WVFCU’s vault from 2015 to April 2019 as she worked as a teller for the credit union. She further admitted to falsifying financial records of the CU to cover up the theft.
Sentencing for Ex-Fannie Mae Employee
In Santa Ana, Calif., a former Fannie Mae employee has been sentenced to 76 months in federal prison for a multimillion-dollar scheme to take bribes and to discount sales of Fannie Mae-owned properties to herself and to real estate brokers in exchange for cash kickbacks, the Department of Justice reported.
Shirene Hernandez, 47, of Corona, Calif. was sentenced by United States District Judge Andrew J. Guilford, who also ordered her to pay $982,516 in restitution to Fannie Mae.
After a five-day trial in February 2019, a jury found Hernandez guilty of two wire fraud counts involving deprivation of honest services in furtherance of her scheme, which resulted in more than $120 million in sales and more than $3 million in corrupt commissions to brokers. The brokers who benefited from the sales paid the bribes and kickbacks to Hernandez in cash, which sometimes was stuffed into envelopes and delivered in parking lots, airports and coffee shops, the DoJ said.
What the Evidence Showed
The evidence at trial showed that the bribery scheme arose out of Hernandez’s misuse of her official position with the Federal National Mortgage Association. From 2010 until 2015, Hernandez worked as a sales representative for Fannie Mae at its Irvine office.
As a sales representative, Hernandez was responsible for picking real estate brokers to whom she assigned Fannie Mae-owned property listings. Brokers sought the listings because they would obtain commissions on them when the properties were sold. In violation of Fannie Mae rules and federal law, Hernandez demanded and received bribes from the brokers as a condition of her assignment of properties to them. As part of the scheme, she also received bribes for approving below-market sale prices of Fannie Mae-owned properties to the corrupt brokers, the DoJ explained.
Hernandez – using intermediaries and alter egos – bought at least one Fannie Mae-owned property in Sonoma for herself at a below-market price. She ensured that multiple offers higher than her own below-market price were rejected. Hernandez then paid for the property using a duffel bag filled with $286,450 in cash, which she gave to her sister-in-law to bring to the sale’s closing, the DoJ said.
Crime Was ‘Egregious’
Hernandez also helped family members become Fannie Mae-approved brokers, and then steered nearly $80 million in Fannie Mae listings to them, resulting in nearly $2 million in commissions in less than three years, the DoJ said.
In total, Hernandez received more than $1 million in benefits, including the cash kickbacks and rent that she collected and equity that she built in the Fannie-Mae property she bought for herself.
“The crime that [Hernandez] committed was egregious,” prosecutors wrote in their sentencing memorandum. “Rather than act in the public’s best interests…she used her position to line her own pockets. [She] is unremorseful and unrepentant, and would seemingly do it all again if she could avoid being caught.”