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Five enter plea deals in mortgage fraud case

By Staff | Mar 3, 2010

The Cape Coral police chief’s son, along with four others, entered into plea deals Wednes-day over criminal charges tied to a mortgage fraud conspiracy.
Stephen Petrovich, son of Cape Police Chief Rob Petrovich and a former detective for the Cape Police Department, pleaded guilty to conspiracy to commit bank fraud and wire fraud, and to money laundering in connection to a conspiracy resulting in approximately $4.23 million in fraudulent loans.
Co-conspirators Tyler Forrey, Steven Reese, Ryan O’Brien and Troy Bossert pleaded guilty to the same charges, according to documents released by the U.S. Attorney’s Office for the Middle District of Florida.
“He is my son and he will always be my son,” Cape Coral Police Chief Rob Petrovich said during a press conference Wednesday. “I love my son and I’m going to love him unconditionally, no matter what.”
But, he added, his son will have to face the consequences of his actions.
“We’re accountable for what we do,” Petrovich said. “I can’t just turn my back on the justice system just because it hits close to home.”
The conspiracy charge carries a maximum sentence of 20 years in prison, a fine of up to $250,000, a term of supervised release of no more than three years and a special assessment of $100. The money laundering charge has a maximum sentence of 10 years as well as a fine of up to $250,000, a period of supervised release of no more than three years and a $100 assessment.
Petrovich said he and his son were aware of the federal investigation, and both knew jail time was a possibility.
“It’s no surprise that something was going to come,” he said. “He knew it was coming. It wasn’t a matter of if, it was a matter of when.”
According to the documents, the Internal Revenue Service, the U.S. Secret Service and the Federal Bureau of Investigation initiated an investigation in early 2008 into a mortgage fraud conspiracy operating in the Cape in 2007 and 2008.
The investigation centered on transactions referred to as “cash-out deals,” where individuals “fraudulently obtained funds from real estate transactions by falsifying loan applications and Housing and Urban Development settlement statements. Members of the conspiracy directed the closing agent to wire funds to limited liability corporations in the control of the co-conspirators.”
Asked whether he saw anything that might indicate what his son was involved in, Petrovich answered that he noticed nothing.
“I wish I did see something,” he said. “If I did, it went past me.”
Petrovich stressed that the actions of one police officer do not represent the Cape department as a whole. He said his son’s actions are not affiliated with the agency.
“It is no reflection of the men and women of this police department,” Petrovich said.
According to the documents, members of the conspiracy identified homes for sale by their owner and told the sellers that they were mortgage brokers and had found buyers willing to pay the seller’s asking price.
“At this time, the housing market in Fort Myers, Florida, was steadily declining and the sellers were desperate to sell their properties,” the documents state.
Some sellers were told that the buyers wanted to obtain additional funds from the bank to repair or improve the home, which required an increase in the sales price. In other cases, the settlement statement was switched out with a fraudulent one reflecting an inflated sales price.
“The loan application was falsified for buyers who were unable to afford the homes purchased at the increased sales prices,” the documents state.
“In addition, the co-conspirators created fictitious cashier’s checks, banks statements, Forms W-2, and other documents which were, in turn, submitted to the lender as part of the loan application,” the paperwork continues. “The fraudulent loan application was submitted to the financial institution for the appropriate personnel to rely on when making the (lending) decision.”
Once the funds were disbursed to the limited liability corporations, the money was divided among members of the conspiracy. The individuals did not use the funds for home repairs or improvements.
“In fact, the majority of the buyers never intended to keep the house,” the documents state. “Once the buyers received ‘cash-out’ payments from the real estate purchase transaction, the buyers made approximately three mortgage payments on the purchased home and then stopped making payments and would let the home foreclose.”
The involved Cape Coral properties were located at 4923 S.W. Eighth Court, 5609 Del Rio Court, 5223 Stratford Court, 130 S.W. 49th St., 5341 Cobalt Court, 2649 S.W. 29th Ave., 4311 Pelican Blvd. and 1414 N.E. 14th Ave.
Stephen Petrovich resigned from the CCPD in November after being placed on administrative duty pending the outcome of the federal investigation. He had been with the department for 11 years and was a detective with the Property and Financial Crimes section. His salary was $64,084 when he left.
CCPD Sgt. James O’Brien was also placed on administrative duty pending the outcome of the federal investigation. O’Brien has worked for the agency for 10 years and became a sergeant with the Special Operations Unit in 2006. He makes an annual salary of $68,244.
Petrovich said Wednesday that O’Brien will remain on administrative duty until the federal investigation is complete.
“We don’t know where their investigation is going,” he said.
Petrovich added that the CCPD is not been involved with the investigation.
“At no time, whatsoever, was I involved or the department involved,” he said. “This is not our investigation. We did not participate in this investigation.”