A Ligonier man has been sentenced to serve 60 months in prison on a bankruptcy fraud count and 87 months each on bank fraud, mail fraud and wire fraud counts and must pay about $581,000 in restitution.
U.S. District Court Judge Jon DeGuilio sentenced Phillip Yoder, 41, on July 1 after Yoder’s guilty pleas to bankruptcy fraud, bank fraud, mail fraud and wire fraud, according to a statement by Thomas Kirsch II, U.S. Attorney for the Northern District of Indiana. All the sentences are to run simultaneously.
According to Yoder’s plea agreement, he and others who sometimes worked through KOH Enterprises, LLC, perpetrated fraud from 2014 until July 2015 through what he called a foreclosure rescue scheme.
Court documents showed some of the Indiana properties involved in the case were in South Bend and Granger, where KOH was based. There also were some Michigan properties involved in the case.
Yoder had been arrested May 23, 2017, in Florida. He was arraigned and entered a not guilty plea a month later in the U.S. District Court in South Bend.
This year he pleaded guilty during a Feb. 28 change of plea hearing to the counts for which he was sentenced.
“As part of the scheme to defraud, Yoder and others monitored foreclosure notices of properties, and would then approach distressed homeowners and convince them to transfer title of the property in exchange for false promises of being able to avoid further foreclosure obligations,” the statement said.
“They falsely represented to these homeowners that they would handle their mortgage arrearages and the foreclosure process. Because of these false representations, the homeowners vacated the property and transferred their interest in the property through a quitclaim deed to business entities.”
Yoder and others would then pretend to satisfy the outstanding mortgage by mailing fraudulent international promissory note financial documentation to the lender with the mortgage, and by arranging for a satisfaction of mortgage filing at the appropriate county recorder’s office, where the business in on the scheme had recorded the quitclaim deed.
“They would then convey another quitclaim deed to an investor or purchaser of the properties, even though the property was still encumbered. The total loss to investors and insurers was $1,466,136.20,” the statement said.
The scheme unraveled, and Yoder eventually found himself in a bankruptcy proceeding where he claimed as an asset on Feb. 24, 2016, a $1 billion gold bond, which he said in his plea agreement he knew was fraudulent and worthless, the statement said. He had claimed debts of $792,592.46 in the proceeding.
“Creating a scheme that enriches the defendant while defrauding banks, insurers and average home owners, jeopardizes our financial system,” Kirsch said. “My office, in coordination with all our law enforcement partners, will continue to aggressively prosecute these type of cases.”
“Everyone has the right to expect honest representation from those they do business with,” Grant Mendenhall, special agent in charge of the Federal Bureau of Investigation’s Indianapolis Division, said in the statement.
“Targeting homeowners with this type of fraudulent activity when they are already dealing with financial hardship is not only illegal but a violation of trust and won’t be tolerated by the FBI.”
Nancy Gargula, U.S. Trustee for Indiana and Southern and Central Illinois, considers the sentence a strong message to anyone considering abusing the bankruptcy system, she said in the statement.
“Providing false documents such as fictitious ‘bonds’ to the United States Bankruptcy Court undermines the integrity of the system and will not be tolerated,” Gargula said. “We appreciate the commitment of U.S. Attorney Kirsch and our law enforcement partners to holding those who abuse the bankruptcy system accountable.”
She encouraged anyone with potential evidence of suspected bankruptcy fraud to email the information to USTP.Bankruptcy.Fraud@usdoj.gov.
In addition to the FBI and a Northern Indiana Bankruptcy Fraud Working Group coordinated by the U.S. Trustee, the case was investigated by the U.S. Department of Housing and Urban Development’s Office of Inspector General.
It was handled in court by Assistant U.S. Attorney John Maciejczyk.