Former Dallas Cowboys linebacker Eugene Lockhart, Jr. was sentenced this week to 54 months in prison and fined $2.4 million after pleading guilty to wire fraud.
Lockhart, of Carrollton, led a massive mortgage fraud scheme in the Dallas area from 2002 to 2005, the Department of Justice said.
Lockhart, who played for America's Team from 1984 to 1990, used his fame to get business and further the scheme, the DOJ asserts.
In the scheme, Lockhart and his partners would negotiate sales prices of distressed or pre-foreclosure homes in the Dallas area and then create surplus loan proceeds by inflating the sales price that was substantially more than the fair market value, the DOJ said.
Generally, they recruited individuals to act as nominee or “straw purchasers” or “straw borrowers,” promising to pay them a bonus or commission of between $10,000 and $20,000 for their participation in a particular real estate transaction. The conspirators caused the loan applications for each straw borrower to include false financial information, often including inflated false income figures to conceal the borrower’s true financial condition so that the lender would more likely approve the loan. The conspirators concealed from the lenders the true status, financial condition and intentions of the named borrowers, knowing that loans would not likely be approved if the lender knew the true role, credit worthiness and risk of each straw borrower. The conspirators falsely represented in loan documents that the straw purchaser intended to use the property as their primary residence, intentionally concealing from the lender that each straw borrower viewed himself as an “investor,” who never intended to occupy the home.
Some of the conspirators also caused bogus and fraudulent “marketing fees” to be listed on loan closing documents to provide a means for the conspirators to receive surplus/excess loan proceeds.
The scope of the conspiracy involved approximately 54 fraudulent residential property loan closings resulting in the funding of approximately $20.5 million in fraudulent loans. The actual loss to lenders is nearly $3 million.
The DOJ said Lockhart was involved with several real estate entities "with names often derived from reference to the Dallas Cowboys, including America’s Team Mortgage; America’s Team Realty; America’s Team Funding Group; Ace Mortgage; Cowboys Realty; Cowboys Mortgage and KLT Properties."
He conspired with nine others, all listed below, who have all been sentenced in the case.
- William Randolph Tisdale, of Dallas, also considered a leader of the scheme, along with Lockhart, was convicted at trial on one count of conspiracy to commit wire fraud and one count of bank fraud. He was sentenced to 10 years in federal prison and ordered to pay approximately $1.1 million in restitution
- Hubert Jones, III, of Garland, Texas, who acted as a lieutenant for Tisdale, was convicted on one count of conspiracy to commit wire fraud, one count of bank fraud and one count of wire fraud. He was sentenced to 58 months in federal prison and ordered to pay $681,545 in restitution.
- Lendell Beacham, of Desoto, Texas, a mortgage company owner, was convicted on one count of conspiracy to commit wire fraud and one count of wire fraud. He was sentenced to 36 months in federal prison and ordered to pay $947,700 in restitution.
- Patricia Ortega Suarez, of Dallas, an escrow officer, pleaded guilty to two counts of making a false statement to the U.S. Department of Housing and Urban Development (HUD) and was sentenced to 18 months in federal prison and ordered to pay approximately $1 million in restitution.
- Michael Anthony Caldwell, of Arlington, Texas, who was a manager for a title company, pleaded guilty to one count of making a false statement to HUD. He was sentenced to one year and one day in federal prison and ordered to pay $445,100 in restitution.
- Donna Lois Kneeland, of Grand Prairie, Texas, also an escrow officer, pleaded guilty to one count of making a false statement to HUD. She was sentenced to a three-year term of probation and ordered to pay $135,000 in restitution.
- Bryan J. Moorman, of Mesquite, Texas, who acted as a real estate appraiser, pleaded guilty to one count of wire fraud and was also sentenced to a three-year term of probation. He was also ordered to pay $281,200 in restitution.
- Jermaine Frederick Frazier, of Desoto, who acted as a loan processor and lieutenant for Lockhart, pleaded guilty to one count of conspiracy to commit wire fraud. He was sentenced to 46 months in federal prison and ordered to pay approximately $2 million in restitution.
- Scott David Eller, 45, of Mansfield, Texas, a CPA, was convicted on one count of conspiracy to commit wire fraud. He was sentenced to 18 months in federal prison and ordered to pay approximately $1.7 million in restitution.
Lockhart must report to prison on Jan. 16, 2013.