Appeal to be heard in Miss. mortgage flipping case

Published 11:39 pm Saturday, February 21, 2009

A New Orleans appeals court is scheduled to hear arguments in March from three people convicted in a mortgage fraud scheme in Mississippi.

The case involved alleged ringleader Richard Lucas and two others who were sentenced for their roles in the mortgage flipping scheme.

The 5th U.S. Circuit Court of Appeals has scheduled arguments for March 4.

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Federal prosecutors claimed the defendants bought distressed property in Hattiesburg, Petal, Laurel and Gulfport at low prices, got inflated appraisals and high mortgage loans and sold the property soon after buying it — a process called flipping.

Prosecutors said the defendants solicited victims to apply for mortgage loans in excess of the property’s value and pocketed the proceeds.

Thirteen people were charged in the elaborate scheme. Ten pleaded guilty; only Lucas, Kimberly Castle and Kenneth Stalnaker chose a jury trial and were convicted on Nov. 15, 2007.

Lucas was sentenced to 14 years in prison, followed by five years of probation and mandatory participation in the prison bureau’s drug treatment program. He must also make more than $1.3 million in restitution to companies defrauded in the scheme.

Castle, an attorney the government said used her legal credentials to close the bogus transactions, was sentenced to two concurrent 48-month terms in jail, followed by five years of probation. She also must pay about $1.3 million to defrauded companies.

Stalnaker was a Petal appraiser whose role in the scheme, the government said, was to return high-end appraisals for low-end properties. He was sentenced to 28 months in jail and five years of probation, and must make $938,767 in restitution.