HOUSTON -A 65-year-old resident of Lake Jackson has been
ordered to federal prison for his role in a mortgage fraud scheme, announced
U.S. Attorney Ryan K. Patrick. Kirk Lawrence Brannan pleaded guilty to bank
fraud April 30, 2018, admitting he conspired with others from 2005 to 2009 to
execute a scheme to defraud Wells Fargo Bank and other lenders.
Today, Chief U.S. District Judge Lee Rosenthal handed him
a 36-month sentence to be immediately followed by three years of supervised
release. At the hearing, the court held that, in committing the crime, Brannan
had used sophisticated means and had employed his special skills as an attorney
and real estate agent. Judge Rosenthal noted that Brannan had created false
HUD-1 settlement forms and title documents that purported to show the sale of
three of his properties to his children at grossly inflated prices. These HUD-1
forms then became the three comparable sales that appraisers relied upon in
over-valuing the rest of Brannan’s beach home properties which Brannan then
sold through the fraud scheme at inflated prices.
In imposing the sentence, Judge Rosenthal balanced
Brannan’s honorable military service and other aspects of what, up to the time
of the fraud, had been an exemplary life, with the tremendous damage mortgage
fraud had done to the U.S. financial system and economy and the fact that
Brannan had been a knowing and willing participant in such a scheme. She also
pointed out that some individuals much less sophisticated than Brannan had
suffered severe economic harm as a result of Brannan’s scheme.
He was further ordered to pay $5,317,350 in restitution.
A money judgement was previously entered in the amount of $2,401,368.
Brannan sold 10 beach homes in the Freeport/Surfside area
to “straw buyers” at exorbitant prices. Other co-conspirators recruited straw
buyers who created loan applications with misrepresentations that lenders
relied upon in deciding to make the mortgage loans. The applications contained
misrepresentations of the buyer’s address, employer, income and expenses. The
applications also suggested the buyers were much better credit risks than they
actually were. Brannan admitted he paid kickbacks to co-conspirators each time
one of the beach homes was sold to a straw buyer.
The beach properties were sold at two to three times the
appraised values. The mortgage lenders, including Wells Fargo Bank, were
induced to lend the inflated amounts for the purchases through flawed or
fraudulent appraisals which were based on comparisons Brannan manufactured to
further the scheme.
Brannan created settlement statements that suggested he
sold three of his properties to his children at exorbitant prices. Appraisers
relied upon these “sales” as comparable sales in appraising Brannan’s remaining
properties sold to straw buyers. As a result of the fraudulent appraisals, he
and his co-conspirators were able to inflate the values for his properties and
deceive the lenders into approving home loans at those exorbitant amounts.
All of the straw buyers defaulted on the mortgages, and
all 10 of the beach properties ended up in foreclosure.
The fraudulent mortgage loan scheme resulted in a loss of
$5,317,350 to Wells Fargo Bank and the other lenders. Brannan paid $2,401,368
to his co-conspirators as part of the scheme.
Previously released on bond, Brannan was permitted to
remain on bond and voluntarily surrender to a U.S. Bureau of Prisons facility
to be determined in the near future.
Co-conspirators Chucoboie Lanier, 42, David Lee Morris,
56, and Derwin Jerome Blackshear, 52, all of Houston, previously pleaded guilty
for their roles in the scheme. Lanier received a sentenced of 36 months while
Morris was ordered to serve a 42-month prison term. Blackshear is set for
sentencing April 9.
The Texas Department of Public Safety and the FBI
conducted the investigation. Assistant U.S. Attorneys Robert Johnson and
Michael Day are prosecuting the case.