Jury delves into details of alleged fraud - WDAM-TV 7-News, Weather, Sports-Hattiesburg, MS

Jury delves into details of alleged fraud

Day two of the mortgage-flipping trial left jurors with an earful from three witnesses, one of whom defended against claims that a national mortgage company knew fraud was being committed.

The regional operations manager for Countrywide Finance and Alliance Bonding company testified the company originated loans on 41 properties, sold those loans to other lenders but retained their service. 

Defense attorneys for Richard Lucas, Kimberly Castle, and Kenneth Stalnaker, argued that Countrywide knew Lucas was selling distressed properties for an inflated rate while making a profit, but did not stop operations. Attorneys also questioned the company's checklist of requirements on loan and closing procedures.

The third witness, a Maryland investor who bought four properties from Lucas Development, claimed her good credit was used to purchase the properties, allowing her to receive two $8,000 checks after meeting with Lucas, Castle, and another person indicted, Jafus Jones, in Gulfport. But the shocker: That investor is also an employee at the Internal Revenue Service.

The trial resumes Wednesday morning.

The jury in the case was seated Monday.

Hattiesburg attorney Kimberly Castle, alleged ringleader Richard Lucas, and real estate appraiser Kenneth Stalnaker are charged with conspiracy to commit wire and bank fraud. In addition, Castle and Lucas are charged with money-laundering. 

So far, nine other defendants have pleaded guilty and are expected to testify for the government. 

In opening statements, government prosecutors claimed Lucas, who owned Lucas Development and Investments, hatched a scheme in which he and his co-conspirators would buy distressed properties, inflate the appraisals, sell the properties at inflated prices, and pocket the proceeds. 

Prosecutors say Castle handled real estate settlements for Lucas, conducting property closings knowing that borrowers did not personally make the required down payments. 

The trial is expected to last two weeks.    


 

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