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Just days after a federal grand jury subpoenaed the real estate closing files of The McFarland Law Firm in Stone Mountain, Ga., the firm’s two paralegals arranged to have them destroyed. Then the lawyer who employed those paralegals claimed the files had been stolen in an office break-in. Those allegations are contained in a sweeping federal indictment of Chalana C. McFarland, a disbarred attorney who until Thursday was closing real estate transactions in Miami; her paralegals; a mortgage broker; appraisers; real estate agents; and others who participated in an alleged $20 million mortgage fraud scheme. The indictment reveals how mortgage fraud, which is pervasive in Fulton and DeKalb counties, is often aided by the collaboration of attorneys and other members of the real estate industry at virtually every step of a sale. This week, U.S. Attorney William S. Duffey Jr. said the indictment signals his resolve to prosecute a crime that has plagued dozens of neighborhoods throughout metro Atlanta. Named in the indictment are McFarland; her two paralegals, Brenda G. Brown, 45, of Lithonia, Ga., and Lisa R. Bellamy, 33, of Decatur, Ga.; fugitive mortgage broker Judith H. Hooper; and Melinda Renee “Little Renee” Tyner, one of Hooper’s loan processors at American Mortgage Exchange. The indictment also names husband and wife real estate agents Jewell and Sidney Williams, and Thomas Christopher Davis Jr.; appraisers Brandon G. Wilhite, James Frederick Pettigrew and Kenneth “Kenny” Earl Collins; Omar Rashad Turral, a former student at the Florida A&M University College of Pharmacy and Pharmaceutical Sciences who allegedly supplied stolen student identities to the suspected fraudsters; and Melvin Thomas Quillen, a Jonesboro, Ga., man accused of recruiting people willing to masquerade as borrowers on fraudulent loan applications. The indictment, Duffey said, includes “those very people we entrust in maintaining the very integrity” of real estate transactions. The 158-count indictment includes charges of conspiracy to commit bank fraud, bank fraud, wire fraud, money laundering, obstruction of justice and perjury. It alleges a complex financial scheme that, since 1999, has defrauded a string of banks, mortgage and title insurance companies nationwide of more than $20 million. The alleged scheme involved multiple sales of more than 100 homes in the DeKalb communities of Mountain Oaks, North Shores, Southland and Water’s Edge, and in Douglasville, Elberton, Fairburn, Griffin and Atlanta. Duffey said it is one more sign that mortgage fraud in Georgia is at “disturbingly high levels.” This year, the ZIP code cluster that makes up Fulton has soared to No. 1 in the nation in mortgage fraud. DeKalb ZIP codes sit at No. 3 nationally for the number of loans containing misrepresentations, according to data compiled annually by the Federal National Mortgage Association. MORTGAGE BROKER TURNED FUGITIVE At the center of the alleged scheme are McFarland and paralegals Brown and Bellamy. Also central to the indictment is Hooper, who allegedly brokered fraudulent mortgages through American Mortgage Exchange, a Stone Mountain mortgage brokerage. Hooper taught loan processors how to “artificially inflate property values, recruit straw borrowers, create, purchase, and use false information and select real estate agents, closing attorneys, appraisers, bank employees and property managers” to defraud lenders, the indictment alleges. Hooper left the United States in 2000 for Belize and is a fugitive, according to the indictment. Federal investigators say she has changed her appearance through plastic surgery and has assumed a new identity. DISBARMENT THE LEAST OF WORRIES McFarland was disbarred by the Supreme Court of Georgia in November 2002 after the State Bar of Georgia accused her of collecting title insurance premiums but failing to convey them to the title insurance company that employed her. McFarland acted as an agent for First American/Attorney’s Title and Old Republic Title Co., according to the indictment. McFarland is now living with relatives in Miami, where, until Thursday, she had been handling real estate closings as a title agent. Unlike Georgia, Florida does not require that an attorney handle such closings. Her Atlanta attorney, Dwight L. Thomas, said that as a condition of her bond, McFarland agreed to quit her job and forgo employment in the real estate field. Thomas said McFarland is free on a $10,000 signature bond. He declined to comment on the case, saying he has not had the opportunity to review the charges against his client in detail. The charges McFarland now faces go far beyond the complaints that led to her disbarment. The indictment accuses McFarland of falsely certifying at real estate closings that the loan proceeds were disbursed properly. Instead, according to the indictment, McFarland arranged for the purchase of residential properties for quick resale at artificially inflated prices, often using the proceeds of the resale to pay for the initial purchase. The practice is known as “flipping.” According to the indictment, McFarland also failed to collect down payments from borrowers that the lenders required. The indictment also accuses her of closing real estate deals “where straw sellers and straw borrowers failed to appear at closing, the loan proceeds were not disbursed as reflected on HUD-1′s, the down payments did not come from the borrower funds as reflected on the HUD-1′s, the borrowers did not intend to occupy the property as their primary residence and the straw sellers did not yet own the property purportedly sold to the borrowers.” HUD-1′s are settlement statements required by federal law that detail the disbursement of loan monies, the actual sales price and other associated costs of each property transaction. McFarland recruited some of those suspected straw borrowers, among them friends and relatives, and acted as a straw borrower “on a number of occasions,” according to the indictment. ATTORNEY HAD HELP The former Stone Mountain attorney was assisted by her paralegals, according to the indictment. Bellamy allegedly notarized closing documents “falsely representing that she had witnessed the signatures of borrowers and sellers and forwarded said documentation to the lenders,” the indictment alleged. Bellamy is also accused in the indictment of helping to arrange a loan for her boyfriend — even though he did not qualify — and of buying a home for herself using false qualifying information about her income, assets and identity. Bellamy’s lawyer, Stone Mountain attorney Robert Kenner Jr., could not be reached for comment. The indictment accuses former McFarland paralegal Brown of having an interest in shell companies to which the firm paid $276,000 in proceeds from various loans. Brown’s attorney, Cynthia W. Roseberry, was in court in Augusta and could not be reached for comment. Brown and Bellamy are also free on $10,000 bonds. The indictment also documents a number of $10,000 payments to co-defendant Turral, who was at one time a student at Florida A&M’s pharmacy school. Each payment, made with a McFarland Law Firm check, paid for a single stolen identity, according to the indictment. McFarland also allegedly disbursed through her escrow accounts more than $400,000 to an appraiser and his wife who inflated values on each flipped property, often by as much as $100,000. For her role, McFarland allegedly received — in addition to her regular fees — $4,000 each in “under-the-table” payments for at least 91 real estate transactions totaling $20 million that were identified as fraudulent in the indictment. Legal fees in Atlanta generally average $600-$800 per closing. ‘GET RID OF THE FILES’ The indictment also accuses McFarland and her paralegals of obstructing justice. In separate counts, McFarland is also accused of perjury in connection with alleged destruction of the firm’s real estate records subpoenaed by the grand jury in April 2001. Because the federal government had given the brokerage and the law firm two weeks to respond to the subpoenas, real estate agent Sidney Williams, another of McFarland’s co-defendants, allegedly advised McFarland’s paralegals and others “to get rid of the files, because without the files, they don’t have anything,” according to the indictment. McFarland’s paralegals subsequently gathered the her real estate files and a computer hard drive and transferred them to a business where loan processor Tyner “had a contact.” The files were later destroyed, the indictment says. McFarland then had her attorney advise the U.S. Attorney’s Office that the files had been stolen, the indictment alleges. She also obtained false affidavits from her office administrator and bookkeeper attesting to the alleged theft of the missing records.

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