ST. LOUIS — Two suburban St. Louis men have been indicted on charges they committed mortgage fraud in southeast Missouri, U.S. Attorney Catherine Hanaway said Monday.
Russell McBride, 46, of Creve Coeur and Robert Wrolstad, 59, of O'Fallon were charged in a 34-count indictment and are expected to appear Thursday in federal court in Cape Girardeau.
The two men are accused of recruiting investors to buy Sikeston properties for more than the actual selling price. They allegedly got appraisals overvaluing the properties and received inflated loan proceeds while working for Century Mortgage and Finance Inc. The provider of mortgage-related services, which is now out of business, had offices in Sikeston, Cape Girardeau and St. Louis County.
The scheme resulted in at least a half million dollars in losses, Hanaway said.
A lawyer for one of the men did not immediately return a call seeking comment. An attorney for the other man could not immediately be reached.
Hanaway said the alleged fraud damaged the economy. "These guys represent that line of scrutiny that would have kept bad loans from getting into the system," she said.
But it also can have a devastating effect on an area where properties sit vacant following instances of fraud, she said.
Investigators learned of concerns when bankers in Sikeston began to notice inflated prices linked to the transactions.
The indictment relates to a dozen properties in Sikeston. Hanaway said as a mortgage broker, Century Mortgage would prepare mortgage applications and other documentation for borrowers. Then, it would find a mortgage lender to make a loan.
The indictment alleges that from July 2005 through November 2006, investors recruited by the two men bought Sikeston real estate. The property owners sold the land at or near market value.
However, the investors paid significantly more than the price sellers received, after the men received appraisals that overvalued the properties. Hanaway said documents supplied to the mortgage companies making the loans "were falsified in many respects."
The indictment said McBride told investors the properties were good investments, that rents would pay the mortgages and, in some cases, that property could be sold again in about a year for a profit.
McBride and Wrolstad were charged with one count of conspiracy to commit wire fraud and mail fraud, 12 counts of wire fraud and 12 counts of mail fraud. McBride faces six counts of money laundering and Wrolstad is charged with three counts of money laundering.