Neighborhood moms battle mortgage fraud

They were stay-at-home moms intent on protecting their homes and families.

Their relentless determination led them to the front lines in a war against an insidious crime so prevalent here that Georgia ranks No. 1 in the country.

Who better to notice a shift in the neighborhood --- homes falling into disrepair, people moving in and out, cars coming and going at all hours --- than a couple of astutely curious mothers?

Alicia Sheppard and Ann Fulmer picked up on those clues and more. They watched housing prices and property taxes go up in their suburban neighborhoods while loud music, roaring cars and the sound of gunfire dragged down the quality of life.

They independently began investigations, starting with public records, such as deeds at the county courthouses. They discovered irregularities. Some of the problem houses in their neighborhoods had been sold twice in one day; the second sale often for hundreds of thousands of dollars more than the first.

They discovered mortgage fraud.

It's a crime Fulmer has described as "bank robbery without a gun." But the victims are not only the financial institutions involved; the neighborhoods suffer as well.

Once Sheppard and Fulmer met and began to compare notes, they started gathering intelligence on the enemy. They built a formidable coalition whose members were instrumental in advocating for a tough new law passed this year to prosecute fraudsters.

As a result of the Residential Mortgage Fraud Act, State Attorney General Thurbert Baker has put mortgage scammers on notice that they're squarely in the state's sights.

The FBI also is investigating mortgage fraud in metro Atlanta. Gwinnett County has seen 14 arrests since June, including three this week.

Fulmer and Sheppard's growing expertise has put them in demand. Activists in other neighborhoods want their help. Georgia ranks No. 1 nationally for mortgage fraud, according to the Mortgage Asset Research Institute, so there's plenty of need.

Their Georgia Real Estate Fraud Prevention and Awareness Coalition, or GREFPAC, has become a national model. They travel widely to speak at meetings of professional organizations.

And the news media wants to tell their story. Fulmer was on ABC World News Tonight recently; both have been interviewed for a story yet to appear in People magazine. The pair are weighing other requests.

It's a story, they say, of waking up to your worst nightmare next door.

"In the early days, Ann and I didn't have anything like GREFPAC in mind. We were just looking for a way to heal our communities," said Sheppard. "Nobody is immune from mortgage fraud, a gated community or in an in-town neighborhood. No one deserves these kinds of problems." The scam

Tucked into south Gwinnett near Stone Mountain and the Yellow River, Moorings IV subdivision has 43 houses priced from the high $180,000s to $1 million. Alicia and Mitch Sheppard built their dream house there in 1995, customized with features for their handicapped middle child, Maggie.

The diverse neighborhood had friendly homeowners who cared about their property. Alicia waved to passers-by as her baby son made his way around the grassy front yard.

Then things began to change.

It started when one couple divorced and moved away. Other families transferred to jobs in other cities. Still others decided to downsize. "For Sale" signs seemed to be everywhere.

As houses changed hands, five were bought by a company named Prime Plus. For one house, Prime Plus paid $185,000 then sold it minutes later for $335,000 to would-be investors, who bought it sight unseen.

Authorities later found the investors were unsuspecting people with good credit who wanted to make money in real estate. Prime Plus executives created false financial documents using the investors' real names and Social Security numbers.

Prime Plus officials told investors they needed only to attend the closings and pay the monthly mortgage. Prime Plus would collect rent and handle maintenance.

But to the Sheppards, one house across the street began to show signs of neglect, even with a lot of activity. Delivery trucks came often. Fancy cars as well as jalopies arrived at night. Men wandered around the front yards, cellphones pressed to their heads.

Sheppard suspected drug dealers had moved in. She contacted Gwinnett police and told them what was going on.

A few nights later, Alicia and her husband were home watching a video when they heard gunfire. Mitch Sheppard sent his family to the basement and then peered outside. He saw a man in the street carrying an automatic weapon.

Cars roared up and men began shooting at the house across the street. Someone returned fire. Minutes later, police arrived.

The Moorings IV incident taught Alicia "there's nothing like a good old-fashioned shooting to pull people together." Alicia had been showing families with handicapped children how to fight for them. She decided to fight for her neighborhood, too.

She held a community meeting. Along with neighbors, she met with Gwinnett police and the subdivision became a Community Outreach Police Services community, to increase awareness and strengthen ties with law enforcement.

She began looking for other neighborhoods that had similar problems, hoping to convince law enforcement and regulatory agencies "that ours wasn't an isolated case, that we had a big problem in Gwinnett." Tracking patterns

In the mid-1990s, Ann Fulmer began to notice in her Smoke Rise subdivision of DeKalb County some of the same patterns Alicia was seeing. Houses changed hands quickly, sometimes in the same day, for large profits.

Ann began tracking real estate transactions. One house priced at $200,000 sold for $350,000. How do you do that? Ann wondered.

At the county courthouse, a search through sanitation and deed records confirmed certain homes were being bought and sold by the same people.

Some houses seemed vacant. Others needed work. But UPS delivered packages and cars appeared at night. At the same house where children were on free school lunch, adults were driving Jaguars.

Within a certain cluster, taxes went up 30 percent in one year and sales prices rose from $200,000 to more than $1 million. As vice president of her community association, Ann showed people how to appeal their assessments. She worked with the county to correct the tax digest.

"I realized we were looking at something big and I tried to go to the DeKalb police," Ann said. "But in their minds we weren't the victims of mortgage fraud."

The police did start to enforce quality-of-life ordinances. Some residents had outstanding warrants and carried revoked licenses. Others were felons who had been convicted of credit card theft, arson, assault and narcotics trafficking.

Ann held a meeting involving officials from the U.S. attorney's office, the FBI, the IRS and the DeKalb Sheriff's Office. The results weren't positive. "Everyone looked at me like I needed a better hobby," Ann said. "I learned felons could live wherever they wanted."

Fulmer's disappointing experience made her more determined to fix things. A few months later, she was eating at Smoke Rise Country Club. Sheppard approached her and told her they needed to talk. Sheppard had heard from her parents, who live in Smoke Rise, what Ann was trying to do. Ann agreed to meet the following week. Fraud squad

The two women hit it off. They found some of the same people were buying houses in Smoke Rise and Moorings IV. Because local police said they couldn't do much about the white collar crime, they went to the Department of Justice and the U.S. attorney's office. No one intimidated them --- Alicia had advocated for the handicapped in Washington and Ann was then teaching law at Emory University.

They found a victim of mortgage fraud, as defined by the law: Julia Hiler-Barrette, vice president of Sunshine Mortgage, whose company had lost hundreds of thousands of dollars.

Fraudulent buyers would obtain loans far larger than the price of a particular house.

They would then make a few payments, pocket the difference and let the house go into foreclosure, with Sunshine Mortgage holding the bag.

Ann and Alicia arranged to meet with U.S. Senate investigators who were in Atlanta. They guided the visitors around their neighborhoods, pointing out problem houses.

The U.S. attorney's office held a subsequent meeting for community members, law enforcement officials, regulatory agencies and members of the real estate industry. The office agreed to share information with local law enforcement officials and to work on prosecuting those responsible for mortgage fraud.

Five years ago, Ann became a DeKalb tax assessor. Having watched property flip, she knew what to look for.

She helped educate the tax assessor's department about flipping and developed programs for the Georgia Department of Revenue.

Hiler-Barrette kept meeting with Alicia and Ann, bringing along many professionals --- Realtors, appraisers, title insurers, mortgage insurers and attorneys. Together, the trio became known as the "all-broad fraud squad."

Month by month, the group got a little larger and more diverse. In 2002, the Georgia Real Estate Fraud Prevention and Awareness Coalition was incorporated. Last year, the group held its first convention, attracting people nationwide.

Ann spent a few months working in the DeKalb district attorney's office and now does mortgage fraud litigation for Miles, McGoff and Moore, LLC, an Atlanta law firm.

"Ann could see relationships where no one else could, and she was able to move GREFPAC to a national level because she sees the big picture," said Alicia.

Alicia is working as director of community intake for GREFPAC. Currently, she's helping 12 metro Atlanta communities fight fraud, including Gwinnett County's Wolf Creek subdivision.

So far, two people have been arrested there in connection with an elaborate fraud scheme.

"Alicia has an incredible ability to put a face on mortgage fraud and to give it heart," Ann said.

Copyright 2005 The Atlanta Journal-Constitution