Guilty pleas expected in flipping case

Perry Hall broker to admit to property scheme, lawyers say

Co-defendants make deals

False papers used for $4.4 million in mortgages, U.S. says

September 03, 2001|By John B. O'Donnell | John B. O'Donnell,SUN STAFF

A Perry Hall real estate broker accused of orchestrating a property flipping and mortgage fraud scheme that allegedly cost the government nearly $4 million has agreed to plead guilty, according to federal prosecutors.

William Otto Schmidbauer and seven co-defendants who were indicted by a federal grand jury in April have reached plea deals, U.S. District Judge William M. Nickerson was told in an Aug. 14 letter from prosecutors.

Six other defendants waived indictment and pleaded guilty in June, acknowledging their parts in the case and agreeing to testify against Schmidbauer.

Three remaining defendants -- all mortgage loan officers -- are scheduled for trial in January.

Assistant U.S. Attorney Gregory Welsh, who signed the letter to Nickerson, and defense attorneys would not discuss details of the deals. They said court dates for the guilty pleas have not been scheduled.

"We've reached an agreement in principle but all details haven't been hammered out," said David B. Irwin Jr., who represents Schmidbauer.

The 11-count indictment alleges that Schmidbauer used falsified documents to obtain for buyers mortgages that were insured by the Federal Housing Administration, a unit of the U.S. Department of Housing and Urban Development.

The government alleged that mortgages worth $4.4 million were obtained on 58 houses and that lenders foreclosed on 48 of the properties after defaults on the loans. As a result, FHA paid more than $3.9 million in insurance claims filed by lenders.

Schmidbauer's gross profit on the deals, the government said, was $1.4 million.

In some cases, according to public records, Schmidbauer purchased houses in the name of his company, Schmidbauer Realty, and then quickly resold them at much higher prices, obtaining FHA loans for virtually the full amount. In other cases, he acted as broker but did not take title to the property.

In June 1997, according to public records, Schmidbauer's firm paid $20,000 for a house in the 400 block of N. Highland Ave. and sold it the same day for $69,900 to Steven Todd Schmidbauer, his son. FHA financed the deal with a $69,800 mortgage and had to pay off the loan after it went into default.

The younger Schmidbauer is one of the defendants who has agreed to plead guilty.

Another buyer who has agreed to plead guilty, according to the prosecution letter, is Loretta Granum of Baltimore. She is charged with conspiracy to make false statements and with using a false Social Security number in an application for a mortgage on a house she bought from Schmidbauer.

Records show that in 1997 she paid $68,900 for the Patterson Park-area house three weeks after Schmidbauer's firm bought it for $22,000. A year later, foreclosure was filed.

Forgotten purchase

Included in the court file are the notes of an August 2000 interview with Granum written by Daniel J. Ellis, an investigator for the HUD inspector general. He quotes Granum as saying that she bought several houses through Schmidbauer and that he had changed her Social Security number in two transactions.

She told Ellis she wasn't aware she had purchased a Harford Road house. Ellis wrote that Granum said Schmidbauer had paid her $500 to sign documents -- at a time when she was addicted to drugs -- and she couldn't remember what she had signed.

Paid for signatures

A Pennsylvania woman who acknowledges that she is a former drug addict signed $1 million worth of mortgages on more than a dozen houses, using variations on her name and the names of a 7-year-old daughter and a 9-year-old daughter.

In pleading guilty in June, Mary Anne Shirvani Kintop acknowledged that Schmidbauer paid her $500 to $700 to sign papers in each case and that she had never seen the houses or had any other connection with them.

Also agreeing to plea deals were Edward Charles Rybczynski, 40, of Havre de Grace and his wife, Andrea Marie Rybczynski, 42, operators of Liberty Title Co., which conducted settlements on Schmidbauer deals.

The indictment alleges that, among other things, they "knowingly conducted multiple loan settlements with individuals who were posing as different persons on different occasions, failed to ask any of the purchasers to see their original identification documents."

"We're trying to get this resolved," said Harry W. Blondell, Edward Rybczynski's attorney who is also the corporate attorney for Liberty Title. "They have been and still are cooperating."

Records show that Edward Rybczynski notarized some of Kintop's signatures that were in different names.

An affidavit Ellis signed to obtain search warrants for Liberty Title and Schmidbauer Realty offices in June last year includes his report on an interview with Kintop. He wrote that Kintop said she had questioned Schmidbauer about the frequent use of Liberty Title for settlements.

`Among friends'

"Schmidbauer told her not to worry, that she was among friends," Ellis wrote.

Others who have agreed to plea deals, according to the prosecution letter, are Pamela Estelle Cummings, a Schmidbauer employee, and two other homebuyers, Crystal Sue Perry and Martin Charles Wyatt.

Three mortgage loan officers, Nancy Schultz Franklin, Donald Francis Hanson Jr. and Patricia Ann Robinson, are scheduled for trial in January.

All 11 defendants are charged with one count of conspiracy to make false statements. Schmidbauer is also charged with 10 counts of making false statements, while each of the other defendants is charged with a single count of making a false statement.

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