St. Louis, MO – The U.S Attorney's office for Eastern Missouri announced indictments on Monday for two St. Louis-area men in connection with a mortgage fraud scheme.
Russell McBride of Creve Coeur and Robert Wrolstad of O'Fallon are being charged on 34 counts of mortgage fraud.
The alleged fraud involved 12 properties in the southeastern Missouri town of Sikeston.
U.S. Attorney Catherine Hanaway said the scheme resulted in at least $500,000 in losses.
"Here's how it worked: Cheap house sold for expensive price based on fake appraisal. The defendants take most of the money over the real value of the house put and it in their bank accounts," says Hanaway.
The two men are being accused of acquiring phony appraisals to inflate the properties' value before recruiting St. Louis area investors to buy the mortgages. They are alleged to have pocketing the difference for themselves.
Tom Dirnberger is the Recorder of Deeds for Scott County, Missouri. He says he noticed grossly-inflated real estate sales starting in 2004.
"Then it just really got rampant in 2005, we were getting 10-15 documents that people were borrowing money on properties that we knew weren't worth that kind of money," says Dirnberger.
The indictments in question concern 12 properties, but Dirnberger says as many as 350 were involved in similar scams at a loss of over $17,000,000.
All of the fraudulent mortgages were financed by west coast banks, the majority going through the now-defunct Washington Mutual Savings Bank.
Russell McBride has no connection to the McBride and Sons homebuilding chain.