TEN DEFENDANTS NAMED IN MORTGAGE FRAUD CONSPIRACY INDICTMENT

DUNN LAMPTON, United States Attorney for the Southern District of Mississippi; JOHN G. RAUCCI, Special Agent in Charge of the Jackson Field Office of the Federal Bureau of Investigation; and MICHAEL J. NELSON, Special Agent In Charge of the Internal Revenue Service-Criminal Investigation, New Orleans Field Office, announced that RICHARD B. LUCAS and nine other defendants were charged in a 12-count indictment unsealed today. LUCAS and nine others -- PHILLIP N. WEARY, KIMBERLY A. CASTLE, KENNETH STALNAKER, LORETTA JOY CHAMP, MALCOLM C. CLARK, WILLIAM V. FAIRLEY a/k/a Vaston, JAFUS JONES, JR., KRISTY N. PACKER and MARCY R. IRBY -- were charged with conspiracy to commit bank fraud and wire fraud in violation of federal law. All ten were also charged with one count of bank fraud and nine counts of wire fraud. In addition, LUCAS, WEARY, and CASTLE were charged with conspiracy to commit money laundering.

According to the indictment, all 10 defendants participated in a conspiracy to commit bank and wire fraud by defrauding mortgage lenders of loan proceeds. As described in the indictment, LUCAS arranged for WEARY, FAIRLEY, and JONES
to acquire properties in Hattiesburg and Laurel at low prices for immediate resale. LUCAS arranged for CLARK and JONES to recruit persons to serve as borrowers on mortgage loans for the properties with the understanding that the borrowers would put no money down and would often receive cash payments for use of their names and credit ratings. Where the borrowers' credit histories did not support the mortgage loans, LUCAS arranged for false income statements and bank account information to be prepared and submitted to the lenders. In addition, LUCAS arranged for FAIRLEY, PACKER, and IRBY to acquire properties in their names.

Even though no down payments were made by the borrowers, the Housing and Urban Development form (HUD-1) that is required to be completed by the closing attorney, CASTLE, listed the borrowers as having made a down payment, making it appear they had equity in the properties, when in fact they did not.

As part of the scheme, LUCAS arranged for real estate appraisers, including STALNAKER and CHAMP, to prepare inflated appraisals for the properties, increasing their values significantly over the original purchase price.
In addition, LUCAS, WEARY, and CASTLE were charged with a separate conspiracy to engage in money laundering. As explained in the indictment, the three used the proceeds of earlier transactions to promote the ongoing scheme.

Defendants RICHARD B. LUCAS, KIMBERLY A. CASTLE, KENNETH STALNAKER, LORETTA JOY CHAMP, MALCOLM C. CLARK, WILLIAM V. FAIRLEY a/k/a Vaston, JAFUS JONES, JR., KRISTY N. PACKER and MARCY R. IRBY made their initial appearance today before United States Magistrate Juge Robert H. Walker in Federal District Court in Hattiesburg, Mississippi. All ten defendants face a maximum of five years of imprisonment for the bank and mail fraud conspiracy charge and for each of the mail fraud charges, plus three years of supervised release for each charge. All ten defendants also face up to 30 years of imprisonment and five years of supervised release for the bank fraud charge. Additionally, LUCAS, WEARY, and CASTLE face up to 20 years of imprisonment and three years of supervised release for the money laundering charge. In addition, all ten defendants face a maximum fine of $250,000 for the conspiracy and the bank and mail fraud charges and up to $1 million for the bank fraud charge. LUCAS, WEARY, and CASTLE also face up to a $500,000 fine for the money laundering charge.

The charges in the indictment are only accusations and all defendants are presumed innocent unless and until proven guilty.
Assistant United States Attorneys GAINES CLEVELAND and GLENDA HAYNES are the prosecutors in charge of the case. Mr. LAMPTON praised the efforts of the Federal Bureau of Investigation and the Internal Revenue Service, Criminal Investigation for their diligent work in the investigation of this case.

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