An Indiana man was sentenced to more than three years in prison for his role in a Chicago-based mortgage fraud scheme targeting multiple financial institutions to the tune of more than $1.5 million, according to the U.S. Attorney’s Office.
Following a guilty plea entered last year, Lee Holliday of Schererville, Ind. was sentenced to a federal prison term totaling three years and three months for a federal charge of bank fraud.
In his plea agreement, Holliday admitted that in 2011 and 2012, he committed mortgage fraud in connection with multiple properties purchased across the Chicago metropolitan area. The scheme involved Holliday recruiting buyers and providing them with the funds necessary to make down payments – which were only 3.5 percent of the total asking price of each property as the associated loans were insured by the Federal Housing Authority (FHA).
Once the targeted homes were purchased at inflated prices, Holliday then split the proceeds with both buyers and sellers, promising the buyers that the properties would yield rental income. When the properties failed to turn profit and buyers fell behind on their mortgages, seven properties went into foreclosure.
By the end of his activities, Holliday had cost lenders approximately $1.53 million due to his fraudulent loan applications.
In addition to bank fraud, Holliday also pleaded guilty to engaging in COVID-relief fraud in 2020 and 2021, fraudulently obtaining $391,869 in Paycheck Protection Program funds which he had no legitimate claim on.
The sentence was announced by Morris Pasqual, acting U.S. Attorney for the Northern District of Illinois, and Machelle L. Jindra, special agent-in-charge of the U.S. Department of Housing and Urban Development’s (HUD) Office of Inspector General (HUD-OIG) in Chicago.
“FHA loans are intended to help people who could not otherwise afford a home,” Pasqual said in a press release. “In this case, the money that was supposed to help those people and improve their neighborhoods instead went into the defendant’s pockets.”
“Lee Holliday repeatedly engaged in an egregious mortgage fraud scheme causing borrowers to falsely represent critical income and asset information to qualify them for loans they would not have otherwise qualified for,” Jindra added. “When people take advantage of HUD-insured mortgage programs, it limits opportunities for hard-working individuals trying to achieve the American dream of homeownership. HUD-OIG will continue to work with the U.S. Attorney’s Office and our law enforcement partners to investigate individuals who jeopardize the integrity of FHA mortgage programs.”