A federal grand jury has -- in action prosecutors say is a first in the country -- indicted two people for their roles in a fraudulent credit history scheme that allegedly duped mortgage companies out of nearly $3 million.
Prosecutors say Karen Washam-Hawkins, 48, of Carson, California, and Gerald William Bartlett, 38, of Tampa, Florida, supplied phony Social Security numbers and other false information that allowed their "customers" to create fake credit histories used to buy expensive houses in Lee's Summit, Missouri.
"This federal indictment marks the first time nationwide that the suppliers have been charged in a credit history fraud case, and signals our determination to prevent such schemes from proliferating," said Beth Phillips, U.S. Attorney for the Western District of Missouri.
Credit history fraud is a new and worrisome trend prosecutors are seeing nationwide, Phillips said. "By supplying false credit information, they (criminals) artificially boost credit scores and create a fraudulent credit history that enables their customers to commit financial fraud," she said.
According to the six-count indictment, Washam-Hawkins and Bartlett operated their fraudulent credit history scheme from late 2004 through August 2006. Several of their customers "benefited" from the sham and fraudulently purchased six residential properties totaling $2,717,420, the indictment states.
The indictment details how the scheme worked:
Washam-Hawkins, a real estate agent, allegedly obtained and sold fake Social Security numbers to several individuals. Those phony Social Security numbers allowed her customers to create false credit histories, which were used to deceive lenders and obtain loans;
Bartlett, who operated three businesses in Tampa, allegedly provided false account and payment information to a credit bureau -- action that falsely boosted his customers' creditworthiness and allowed them to dupe lenders and obtain loans.
The indictment also details how three other individuals used the fraudulent information to enhance their credit and purchase homes.
According the indictment, Washam-Hawkins allegedly supplied an Anaheim, California, man named Shade Jerome Howard with false Social Security numbers.
"Washam-Hawkins agreed to supply Howard with false Social Security numbers, referred to as 'news,' for clients of Howard," the indictment states.
Howard then gave Bartlett those false Social Security numbers and additional information and requested "positive credit information" for himself and others so they could obtain loans to buy homes in the Kansas City, Missouri, area, the indictment charges.
Bartlett, using the names South Florida Management Group and Consumer Financial Group, allegedly reported false account and payment information to a credit bureau.
The indictment states this scheme allowed Howard and two other men --- Ronald E. Brown, Jr., of Gladstone, Missouri, and Daryle A. Edwards of Overland Park, Kansas -- to improve their credit "in order to deceive lenders and obtain mortgage loans for residential properties in Lee's Summit."
According to the indictment, Howard purchased two houses totaling $1,201,000, Brown bought three house totaling $1,339,700, and Edwards purchased one house for $418,500.
The indictment also charges Washam-Hawkins and Bartlett with three counts of transferring funds obtained by fraud across state lines. Washam-Hawkins is also charged with two counts of wire fraud.
Phillips said the charges outlined in the indictment are "simply accusations" and not evidence of guilt.