a Bettendorf lawyer, conspired with a mortgage broker, a real estate agent and a pair of buyers to devise a scheme to defraud mortgage lenders

Landlord testifies in mortgage fraud case
Landlord testifies in mortgage fraud case
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Brian Wellner | Posted: Wednesday, June 8, 2011 2:00 am | 1 Comment
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A Davenport landlord who sold his four rental properties to a pair of buyers in 2005 thought something was wrong after two attorneys and a real estate agent backed out of the deal.
Guy Johnson testified Tuesday at Paul Bieber's trial in U.S. District Court, Davenport, on charges that Bieber, a Bettendorf lawyer, conspired with a mortgage broker, a real estate agent and a pair of buyers to devise a scheme to defraud mortgage lenders on numerous Quad-City properties.
Bieber represented Johnson at the closings in 2005 on his properties at 641, 679 and 635 W. 64th St. and 6217 Western Ave. in the Americana Park neighborhood now called Goose Creek Heights.
Johnson testified that before closing, he was in a meeting with two real estate agents, Mary Pat Harper and Ivy Davey, and the buyers, Robert Herdrich and Darryl Hanneken, in the Moline office of attorney Thomas Moens. Another attorney was on a speaker phone.
"There was a lot of tension in the room," Johnson said of the meeting in Moens' office.
He said that after the phone call, Moens left his office in anger. He said Davey declared the meeting over.
Federal prosecutor Don Allegro said in his opening statement Monday that Moens discovered something illegal in the deal to buy Johnson's four properties at a grossly inflated price and wanted no part of it. Davey also dropped out.
So, Johnson said Harper found Bieber to close the deal.
"Mary Pat said she had the attorney who could make the deal happen," Johnson said.
The government claims that Bieber, along with mortgage broker Winnifer Elvidge, who awaits trial on wire and bank fraud charges, falsely represented to lenders that the sale price of the property was the inflated price set in the contract, concealed the existence of the lower actual price and failed to disclose the post-closing kickback paid by each seller to each buyer.
Acoustic Home Loans was the lender for the sale of Johnson's property at 641 W. 64th. The government claims Elvidge and Bieber used a bogus price of $120,000 to fool Acoustic into lending the buyer $102,000 when the actual sale price was $72,500.
At the Nov. 15, 2005, closing, Johnson received a payout of about $56,000 funded by the loan made by Acoustic. After closing, $41,000 was kicked back to Herdrich and Hanneken, according to the charges.
"This whole deal is really starting to stink," Johnson wrote Bieber after the deal went through.
Bieber's attorney, Mark Pennington, said Johnson was angry because he didn't get more out of the deal.
"I told him it was a bad deal. I told him in a letter," Johnson testified during Pennington's cross-examination.
"That's right, because you weren't getting your share of the money, right?" Pennington asked Johnson.
Pennington then asked Johnson if he believed at the time the deal might have been illegal.
"I had professionals telling me that's the way it was done," Johnson said. "I was paying professionals for professional services."
Bieber is charged with conspiracy, two counts of wire fraud and three counts of mail fraud.
Harper, Herdrich and Hanneken have pleaded guilty to wire fraud charges.
Each count of wire fraud and mail fraud carries a prison sentence of up to 20 years and a fine of up to $250,000. Each count of bank fraud carries a prison sentence of up to 30 years and a fine of up to $1 million. The conspiracy charge carries a prison sentence of up to five years and a fine of up to $250,000.