A Chicago loan originator has been convicted of bank fraud for conducting a mortgage scam that swindled varied financial institutions out of a hefty $2.6 million sum. Kevin Smith, a 52-year-old from Melrose Park, Illinois, was found guilty on September 6, 2024, on all counts he faced. Facing each count, Smith may be sentenced to up to 30 years in federal prison, with his sentencing scheduled for December 17, 2024, according to a Department of Justice press release.
During Smith's tenure as a loan originator, he used real estate seminars at churches and hotels around Chicago as a staging ground to recruit buyers. Barely knowing what they were getting into, the buyers were coached to lie about their downpayments' origins and their occupancy intentions. According to the same federal jury finding Smith guilty, he facilitated or instructed others to provide these individuals with the funds meant for down payments, leading lenders to false conclusions that these were the buyers' own money. After the mortgages closed and the loans were issued, it was noted that Smith would pay these buyers with so-called "grants," then siphoned off seller payments for himself, remaining unnoticed by lenders.
The conviction was announced jointly by several entities, including Morris Pasqual, the Acting United States Attorney for the Northern District of Illinois, and agents from both the Housing and Urban Development (HUD) and the Veterans Affairs (VA) Offices of Inspector General. They were represented by Assistant U.S. Attorneys Rick D. Young and Misty N. Wright. Acting U.S. Attorney Pasqual stated, "Loan originators and other mortgage professionals are entrusted with protecting the integrity of the government-backed mortgage program." He added, “Our office will continue to hold accountable any individual who violates that trust to line their own pockets.”
Abusing his role, Smith acted as gatekeeper of FHA-insured mortgage loans and manipulated his real estate know-how to break the rules for his benefit. HUD-OIG Special Agent-in-Charge Machelle L. Jindra said, “Smith abused his position of trust as a gatekeeper of FHA-insured mortgage loans and used his real estate knowledge to circumvent the rules to secure his own self-interest.” They promised to aggressively pursue and bring to justice those exploiting HUD’s mortgage insurance and housing programs. Furthermore, the VA Office of Inspector General underscored their commitment through Special Agent-in-Charge Gregory Billingsley's words, to guarding vulnerable veterans against fraudulent lending, particularly thanking their law enforcement partners and the U.S. Attorney’s Office for their comprehensive investigation efforts.
