Real estate investor and wife plead guilty to fraud conspiracy
SAN DIEGO (CNS) – A real estate investor and his wife pleaded guilty Monday to conspiring with a Rancho Santa Fe broker and others to defraud mortgage lenders and impede the Internal Revenue Service.
Grant McCollough, 38, and his 36-year-old wife, Marisa, pleaded guilty to conspiracy to commit wire fraud and defrauding the United States. Both face up to five years in prison when they are sentenced Jan. 6 by U.S. District Judge Michael Anello.
The McColloughs — of Kearney, Nebraska — recruited investors to act as “straw buyers” and arranged for false information to be submitted to mortgage lenders in support of the buyers’ loan applications, according to the U.S. Attorney’s Office.
The McColloughs also inflated the value of the homes and disguised the source of the down payments in order to skim funds from the fraudulent transfer of property among their co-conspirators. They also admitted hiding their skimmed profits from the IRS, prosecutors said.
More than a dozen of the fraudulent mortgages were arranged by Donald Totten, a mortgage loan officer and broker operating out of Rancho Santa Fe. He pleaded guilty in February to mortgage fraud, bankruptcy fraud and filing a false tax return that failed to report more than $3 million in taxable income.
Totten specialized in brokering a negative amortization loan product which allowed borrowers to make monthly payments less than the interest charged over the same period and without paying down the principal balance, so that the monthly payments were low but the outstanding balance of the loan increased over time.
Totten admitted that defaults in the mortgages he brokered caused losses of between $2.5 million and $20 million. He is scheduled to be sentenced Oct. 20.
Grant McCollough’s business partner at Tycoon Investments, Jason Kent, pleaded guilty in July and admitted assisting Totten, the McColloughs and others with carrying out the mortgage and kickback scheme.
The McColloughs arranged for loan applications to include made-up employment and represented that borrowers earned substantial salaries from the company, when in reality, Tycoon Investments had no employees, according to the government.
With Totten’s help, Marisa McCollough bought a $3.4 million oceanfront home in Lahaina, Hawaii. In order to qualify, she falsely claimed she earned $90,000 per month, had close to $700,000 in savings, and made a down payment of $630,000.