NEWS 8 INVESTIGATES
McKINNEY — A News 8 investigation into mortgage fraud in cities across North Texas has led to indictments targeting 40 people.
News 8 started looking into questionable real estate transactions back in 2006 after learning about investors who were "flipping" houses.
Prosecutors say the group used phony buyers, questionable documents and inflated appraisals to sell houses — including properties in the Hills Creek neighborhood of McKinney — for more than what they were worth.
In 2002, one house on Hills Creek Drive was valued at $315,000; by January 2006, it sold for $625,000.
Prosecutors said the value of other modest homes was increased to as much as $715,000. When the properties sold, prosecutors allege that the profits went to the man at the top in the form of "disbursements."
"And then he's gone, with some $200-$300,000 in profit from that particular transaction," said U.S. Attorney John Bales.
What happens next? "The house is foreclosed on and the asset is a dead weight on the bank's books," Bales explained.
Jocelyn Sapp was the main force in cracking the crime. She observed empty houses and unrealistic property values in her neighborhood, and nagged law enforcement officials until they took action.
"I'm so glad," Sapp said. "I'm glad for all those neighborhoods that were so devastated by this, like our neighborhood."
Appraiser Steve Nichols helped News 8 analyze the paperwork that pinpointed questionable appraisals by Josh Melton, who is now charged in the crime.
"It's my belief you have to have professionals who are able to identify fraud in their own industry and being willing to report it," Nichols said.
The U.S. Attorney expects suspects to begin turning themselves in to a federal judge next week; trials will follow.
Each suspect faces a maximum sentence of at least 20 years.
E-mail bharris@wfaa.com
