Top 5 Stories of 2009 - No. 2 Family indicted for mortgage fraud

By ART LAWLER and BECCA MURPHEY

A family that plays together, will pay together.

In February 2008, Kandace Y. Marriott, 53, her husband, Darrell Marriott, of Gun Barrel City, her daughter, Kally Marriott and her sister Karen Hayes of Mabank, were indicted on mortgage fraud charges which spanned four counties.

Kandace Marriott was sentenced in Navarro County in March 2009 to 99 years in prison for real estate fraud.

She then pled guilty to two first-degree felonies of engaging in organized criminal activity by filing false statement to obtain property or credit, and securing the execution of a document by deception in Kaufman County.

The defendant received two 20-year sentences on the charges, which will be served concurrently.

Karen Hayes also pled guilty to engaging in organized criminal activity and falsifying statements to obtain property or credit.

She was sentenced to 18 years in prison in May 2009.

Darrell Marriott and daughter, Kally Marriott, are still awaiting trial.

The charges stem from the family members systematic efforts to defraud the federal government through a complex mortgage fraud scheme that spanned four counties.

Wednesday, July 29, in Navarro County, Kandace Marriott pled guilty to securing the execution of a document by deception and was sentenced to an additional 20-year prison sentence. Texas Attorney General Greg Abbott’s White Collar Crime and Public Integrity Section prosecuted the cases.

In one indictment, the defendant admitted she provided 88 separate false statements to potential mortgage lenders in Kaufman County, each statement itself a separate felony offense.

In the second indictment, she admitted that seven mortgage notes secured by the U.S. Department of Housing and Urban Development (HUD) were executed based on the deception created with these statements.

This resulted in the transfer and eventual loss of taxpayer-backed monies. Because of Marriott’s false statements and the execution of these notes, lenders were defrauded and made risky loans, which were guaranteed by the federal government.

According to investigators, Marriott and her co-defendants conspired to forge signatures and falsify home loan applications. The defendants prepared fraudulent documents for prospective homeowners who were not qualified for loans backed by HUD. As a result, multiple borrowers defaulted upon their HUD-backed mortgages.

Marriott and her co-defendants operated a Kaufman County real estate enterprise known as Torenia Inc., which did business as Energy Homes.

They continued to operate Torenia even after the Navarro County indictments were announced in February 2008.

The defendants closed their Navarro County business, One Way Home & Land, in late 2005 after litigation and investigations ensued. They then moved their operations to Kaufman County.

Acting on search warrants issued in August 2008, HUD and FBI investigators seized numerous records and assets, including 88 plots of land being offered to prospective buyers, and shut down the defendants’ Kaufman County business.

According to state investigators, the defendants’ scheme cost the federal government and taxpayers millions of dollars.

Evidence uncovered by the state indicates that the defendants supervised the falsification of residential loan applications to ensure that the buyers’ loans would be approved by mortgage lenders.

Investigators found that the defendants repeatedly falsified supporting documents and information, including the buyers’ rent payment verification statements, proof of employment and information about Social Security Administration benefits, among other documents.

Investigators found that the defendants targeted lower-income purchasers whose residential loans would be guaranteed by HUD. As a result, when unqualified buyers defaulted on their home loans, mortgage lenders did not suffer the loss.

Rather, HUD as guarantor of the loans, had to cover these costs. In the Navarro County scheme, investigators believe the defendants cost taxpayers more than $4 million to date.

The Office of the Attorney General received assistance from HUD’s Office of Inspector General, the FBI, the Navarro and Kaufman County Criminal District Attorneys’ offices, and the Corsicana Police Department.

Attorney General Abbott’s Criminal Prosecutions Division is leading the prosecution of the four defendants with the cooperation of district attorneys’ offices in Navarro, Henderson and Ellis counties.