By PETER HUSSMANN
A Kellogg man plead guilty today to one count of the federal indictment brought against him last year for mortgage fraud and faces up to 30 years in prison and a fine of $1 million when he is sentenced on July 12.
Jason Kibbee appeared in federal court today at a change of plea hearing where he plead guilty to wire fraud in return for federal prosecutors dismissing the charge of making a false statement to a financial institution initially brought by the grand jury indictment.
In a plea agreement with prosecutors, Kibbee acknowledges that he "intentionally devised a scheme to defraud others out of money and property by means of material false representations and omissions ... with the intent to defraud."
In entering his guilty plea today, Kibbee admitted that in 2006 and 2007, he was employed as a loan originator with Palmer Mortgage Group, a mortgage brokerage. In addition, Kibbee operated a side business called Equigroup where he held himself out as being in the business of helping distressed borrowers trying to resolve problems with their mortgages.
In early 2007, the agreement states, Kibbee sent an unsolicited letter to either Carl Fudge or his mother, Barb Moyer, regarding his interest in purchasing foreclosed homes. One of the two contacted Kibbee about their home on Capitol Avenue in Des Moines which was in foreclosure. Moyer was the tenant and her son, Carl Fudge, owed approximately $62,600 on the property.
Kibbee brokered a sale of the Fudge residence to his father in-law, Dana Brown, for the price of $100,000. Brown suffers fom physical and mental problems as a result of a stroke and cannot read or write beyond an elementary school level, the plea agreement states.
Brown was used as the straw buyer for the property because Kibbee did not have the financial resources or credit to purchase the Fudge home himself. In about March 2007, Kibbee prepared a loan application and other loan documents for Brown in connection with his purchase of the Des Moines property. The loan application, however, falsely stated that Brown had $3,800 in monthly income and he intended to make the home his permanent residence, both statements Kibbee knew were false in making the loan application.
Kibbee then explained to Brown that he planned to "flip" the house, the purchase was a good short-term investment and enough money would be made off the sale for Brown to purchase a hot tub. Kibbee did not, however, explain that Brown would be bearing all the risk in the investment or that Kibbee would receive more than $31,000 in profit on the day of the closing as a result in the difference of the sales price ($100,000) and the outstanding mortgage ($62,600). Further, Kibbee did not pay Brown enough money to buy a hot tub nor did he immediately "flip" the house.
As part of the sale, Fudge's mortgage and costs and tax sale amounts were paid off. Kibbee directed that $31,000 be paid to Equigroup at the closing.
Under the terms of the mortgage with First Franklin Financial Corp., Brown was required to take possession of Fudge residence withing 60 days and sell his present home within 45 days. In order to give the impression that Brown intended to occupy the Fudge residence, Kibbee created a false HUD Settlement Statement for the purported sale of Brown's true residence in West Des Moines to "Richard Brown" and presented the to First Franklin.
Richard Brown is a real person but unrelated to Dana Brown. Kibbee knew Richard Brown through his home foreclosure research and knew he had no intention of purchasing Dana Brown's home. The HUD settlement statement was used for the sole purpose of satisfying the First Franklin conditions.
Following the closing of the Dana Brown loan from First Franklin, Moyer remained in the Capitol Street home as a tenant. Kibbee instructed Moyer to make monthly payments to him in the amount of $700 and that he would use the money to make mortgage payments on the property. She had the expectation that she eventually would be able to repurchase the house, however Kibbee stoped using monthly payments to pay the mortgage causing the house to fall into foreclosure.
In the plea agreement, Kibbee acknowledge that his false statements regarding Dana Brown's monthly income and intention of occupancy of the Capitol Street home were made with the intent of defraud the lender to obtain a mortgage for Brown which he might not otherwise have been qualified.
Further, Kibbee acknowledged that he failed to explain to his disabled father in-law that he would receive all the profits and Brown would bear all of the risk if Kibbee did not make the mortgage payments or the house was not quickly resold.
In accepting the plea deal, federal prosecutors agreed to drop the second false statement charge and not charge Kibbee with any other federal crimes arising from or directly related to the investigation. The agreement does not, however, apply to any uncharged crimes of violence, any criminal act which Kibbee has not fully disclosed to law enforcement prior to sentencing and any offense committed after the execution of the plea agreement.
Kibbee was released to await sentencing in July.