6 Utahns face mortgage fraud counts

Six Utah residents have been indicted by a federal grand jury on charges they conspired in what prosecutors are calling a mortgage fraud scheme that totaled at least $18 million in fraudulent loans.

Wednesday a federal grand jury returned a 15-count indictment against six residents, charging them with counts of wire fraud, mail fraud and conspiracy to commit a crime.

Indicted were Bradley Grant Kitchen, 40, Provo; David R. Bolick, 51, Sandy; Steve Wells Cloward, 40, Orem; Ron K. Clarke, 40, Provo; Jeffery David Garrett, 43, Provo; and Rebecca Ann Hadlock, 31, of Saratoga Springs.

Federal investigators say the six, who hold various positions in the real-estate industry, formed a network to obtain a series of loans on properties of which they fraudulently inflated the market values.

The indictment states that Kitchen and Bolick agreed to conduct property purchases through Bolick's company, Home Owners Group (HOG), backed up by another of Bolick's companies, Paragon Investment Group (PIG). The two then purchased properties using false statements on loan applications and using false appraisals to inflate the market values of the properties.

Allegations include claims that Kitchen and Bolick recruited "straw buyers" who allowed them to use their credit to secure loans. The indictment states that the loan applications contained overstatements of income, claims of non-existent assets of several thousand up to several million dollars, false occupancy declarations; non-disclosure of payment of fees to straw buyers for signing papers and falsification of down payments when, in fact, there were no down payments, among other claims.

Five homes in the Provo River Bottoms area were among properties used in the scheme. During a press conference Tuesday, federal prosecutors said Kitchen and Clarke entered fictitious sale numbers into the Multiple Listing Service to inflate area prices to use as comparables in property appraisals, which were supplied by Cloward. Garrett and Hadlock, who worked as title/escrow agents, then closed the loans.

The loans were then sent through Countrywide Home Mortgage and American Broker's Conduit in California and New York for funding.

U.S. Attorney for Utah Brett Tolman said the purpose of the actions was to yield millions of dollars in inflated loan proceeds, diverted to the benefit of participants in the scheme as well as to make loan payments on the River Bottoms homes to create the appearance that the loans were performing.

The indictment is the first product of the Utah Mortgage Fraud Task Force, a federal, state and local law enforcement network that was formed earlier this year.