Post on 29-Oct-2015
description
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TENNESSEE EASTERN DIVISION
UNITED STATES OF AMERICA, ) ) Plantiff, ) ) vs. ) Cr. No.____________________ ) CLAY MCCORMACK ) ) 18 U.S.C. 1001 Defendant. ) 18 U.S.C. 1344 )
INDICTMENT
THE GRAND JURY CHARGES:
INTRODUCTION
1. As used in this indictment:
A. The term loan underwriting documents and information specifically includes, but
is not limited to: Uniform Residential Loan Applications, also known as Form 1003,
(hereinafter referred to as 1003s), personal financial statements, W-2 forms, pay stubs,
tax returns, employment verification forms, verifications of\deposit forms, gift letters,
lease agreements, appraisals, contracts for sale; and;
B. The term closing documents refers to documents required by lenders to be
signed in connection with the sale and purchase of real estate. Closing documents
typically include, but are not limited to: a form commonly referred to as a HUD-1 (U.S.
Department of Housing and Urban Development) which is used to disclose all receipts
and disbursements of monies, and costs associated with the sale and purchase of real
estate; Warranty Deeds; Deeds of Trust; Affidavits of Occupancy; and, Truth-in-Lending
forms.
2. At all times material to this indictment:
2
A. Defendant CLAY MCCORMACK was a real estate closing attorney at Teel,
McCormack, & Maroney, PLC in Jackson, Tennessee.
B. JAMES LEE BISHOP was a real estate investor with several Limited Liability
Companies in Jackson, Tennessee.
C. Community Bank and FirstSouth Bank were and are financial institutions whose
deposits were then insured by the Federal Deposit Insurance Corporation (FDIC).
3. Beginning on or before October 22, 2007, and continuing until at least on or about July
27, 2010, the exact dates being unknown to the Grand Jury, in the Western District of
Tennessee and elsewhere, the defendant,
-------------------------------------------------CLAY MCCORMACK-------------------------------------------------
did knowingly, with other persons known and unknown to the Grand Jury, commit the offenses
against the United States, more specifically to commit bank fraud, and make false statements in
violation of Title 18, United States Code, Sections 1344 and 1001.
OBJECT OF THE SCHEME AND ARTIFICE
4. The object of the scheme was that defendant CLAY MCCORMACK and others would
fraudulently obtain loan proceeds from federally insured institutions that funded mortgage loans.
MANNER AND MEANS OF AND THE SUSBSTANCE OF THE SCHEME AND ARTIFICE
5. The manner and means and the substance of the scheme and artifice to defraud and to
obtain monies and other property by means of false and fraudulent pretenses, representations
and promises, were as follows:
6. It was part scheme and artifice to defraud that JAMES LEE BISHOP would recruit
individuals or limited liability companies to purchase real property for the purpose of investment
from him or one of his limited liability companies.
3
7. It was further part of the scheme and artifice to defraud that JAMES LEE BISHOP would
use defendant CLAY MCCORMACK as the closing attorney for his real estate sales
transactions.
8. It was further part of the scheme and artifice to defraud that at the closings CLAY
MCCORMACK would indicate on the HUD-1 that certain lenders were paid off via a check as a
result of the closing. Defendant CLAY MCCORMACK would then void or instruct others to void
the check that day or days later and reissue to the check to JAMES LEE BISHOP.
9. It was further part of the scheme and artifice to defraud that defendant CLAY
MCCORMACK would cause fraudulent documents to be sent to the new lender.
OVERT ACTS
10. In furtherance of the scheme and to accomplish its objectives, the defendant and others
performed at least one overt act in the Western District of Tennessee and elsewhere, including,
but not limited to, the following:
11. Beginning on or before October 22, 2007, and continuing until at least on or about July
27, 2010, the exact dates being unknown to the Grand Jury, the defendant CLAY
MCCORMACK, being aided and abetted by other persons known and unknown to the Grand
Jury, devised and intended to devise a scheme and artifice to defraud, and to obtain monies
and property by means of false and fraudulent pretenses, representations and promises.
12. The scheme and artifice was in substance that defendant CLAY MCCORMACK acted
as closing attorney for the loans in question. In this capacity, defendant CLAY MCCORMACK
or others acting at defendant CLAY MCCORMACKS direction would create a HUD-1, which
indicated a certain lender would have their loan paid in full at the time of the closing. Defendant
CLAY MCCORMACK or others, acting at defendant CLAY MCCORMACKS direction would
also have a check cut to the lender in question and a disbursement worksheet also indicating
the check had been cut to pay the lender. After the closing occurred, defendant CLAY
MCCORMACK or others acting at defendant CLAY MCCORMACKS direction on the same
4
date or several days later would void the checks to the lender and issue new checks made
payable to JAMES LEE BISHOP. Thereafter, defendant CLAY MCCORMACK would provide a
letter to the new lender indicating they were in first lien position on the property. Defendant
CLAY MCCORMACK would allow JAMES LEE BISHOP to provide the closing funds at closings
on behalf of the borrowers and indicate on the HUD-1 that the funds were provided by the
borrowers. The specific details of the scheme and artifice are as follows:
COUNT 1
(Bank Fraud)
13. On or about July 17, 2009, the defendant CLAY MCCORMACK, executed the
aforementioned scheme and artifice and;
A. defrauded Community Bank, 3200 North Highland Avenue, Jackson, Tennessee, a
Federal Deposit Insured Corporation (FDIC) institution, and;
B. obtained monies by false and fraudulent pretenses, representations and promises.
C. It was a part of the scheme and artifice to defraud and to obtain money and funds by
means of false and fraudulent pretenses, representations and promises that the defendant
CLAY MCCORMACK closed a residential loan for Community Bank, 3200 North Highland
Avenue, Jackson, Tennessee, then an institution whose deposits where then insured by a
Federal Deposit Insured Corporation (FDIC) institution, involving property known as 319
Fairmont, Jackson, Tennessee, on July 17, 2009 at his law office located at 87 Murray Guard
Drive, Jackson, Tennessee.
D. It was a further a part of the scheme and artifice to defraud and to obtain money and
funds by means of false and fraudulent pretenses, representations and promises that the
defendant CLAY MCCORMACK created or directed the creation of a HUD-1 showing the
Summary of the Borrower and Sellers Transactions. In this document defendant CLAY
MCCORMACK indicated Payoff of first mortgage loan to The Bank of Jackson in the amount
of $36,000 occurred.
5
16. It was further a part of the scheme and artifice to defraud and to obtain money and funds
by means of false and fraudulent pretenses, representations and promises that the defendant
CLAY MCCORMACK had check number 1-1057 filled out as follows; the check was dated July
17, 2009, written on Teel, McCormack & Maroney, P.L.C. Attorney Real Estate Trust Account
number 41813585, made payable to The Bank of Jackson in the amount of $36,000 with (504)
Payoff of first mortgage loan to The Bank of Jackson-File: 20090754 written in the memo
section.
17. It was further a part of the scheme and artifice to defraud and to obtain money and funds
by means of false and fraudulent pretenses, representations and promises that the defendant
CLAY MCCORMACK instructed an employee to void and cancel check number 1-1057 on July
20, 2009 and on the same date have check number 1-1100 created from the above account
made payable to JAMES LEE BISHOP in the amount of $36,000 with (504) Payoff of first
mortgage loan to The Bank of Jackson-File: 20090754 written in the memo section.
18. It was further a part of the scheme and artifice to defraud and to obtain money and funds
by means of false and fraudulent pretenses, representations and promises that the on or about
July 20, 2009, JAMES LEE BISHOP endorsed and deposited check number 1-1100 into
accounts under his control.
19. It was further a part of the scheme and artifice to defraud and to obtain money and funds
by means of false and fraudulent pretenses, representations and promises that the defendant
CLAY MCCORMACK created or directed the creation of a letter dated December 8, 2009
written to Community Bank. This letter fraudulently advised Community Bank that the bank was
now in a first (1st) mortgage lien against the tract.
20. It was further a part of the scheme and artifice to defraud and to obtain money and funds
by means of false and fraudulent pretenses, representations and promises that the defendant
CLAY MCCORMACK allowed Premier Funding Group, LLC (registered agent JAMES LEE
BISHOP) to provide the cash from borrower in the amount of $8,613.28 at closing.
6
21. It was further a part of the scheme and artifice to defraud and to obtain money and funds
by means of false and fraudulent pretenses, representations and promises that the defendant
CLAY MCCORMACK created or directed the creation of a HUD-1 showing the Summary of the
Borrower and Sellers Transactions. In this document defendant CLAY MCCORMACK
indicated the Cash from Borrower payment of $8,613.28 was paid by H & H Properties (the
borrower) full well knowing that the amount had been provided by JAMES LEE BISHOP (the
seller.) In this document defendant CLAY MCCORMACK also indicated the Payoff of first
mortgage loan to The Bank of Jackson in the amount of $36,000 had occurred.
22. On or about July 17, 2009, in the Western District of Tennessee the defendant
-------------------------------------------------CLAY MCCORMACK-------------------------------------------------
did knowingly with other persons known and unknown to the Grand Jury, obtain money and
funds by means of false and fraudulent pretenses, representations and promises as set forth
above, in that he completed or directed the creation of a fraudulent HUD-1 indicating that
$36,000 would be paid to The Bank of Jackson as a payoff of the first mortgage loan when in
truth and fact he converted for himself and others.
All in violation of Title 18, United States Code Section 1344.
COUNT 2
(BANK FRAUD)
23. All of the allegations contained in paragraphs 1 through and including 12 of this
Indictment are re-alleged and incorporated by reference as if fully set forth herein.
24. On or about April 22, 2010, the defendant CLAY MCCORMACK, executed the
aforementioned scheme and artifice and;
A. defrauded FirstSouth Bank, 1862 Hwy 45 Bypass, Jackson, Tennessee, a
Federal Deposit Insured Corporation (FDIC) institution, and;
7
B. obtained monies by false and fraudulent pretenses, representations and
promises.
25. It was a part of the scheme and artifice to defraud and to obtain money and funds by
means of false and fraudulent pretenses, representations and promises that the defendant
CLAY MCCORMACK closed a residential loan for FirstSouth Bank, 1862 Hwy 45 Bypass,
Jackson, Tennessee, a FDIC institution, involving property known as 895 Rushmeade, Jackson,
TN 38305, 40 Stratford, Jackson, Tennessee 38305, 104 North, Jackson, TN 38301, 117
Alexander, 123 Melrose, Jackson, TN 38301 and 43 Larimer Jackson, Tennessee 38301 on
April 22, 2010 at his law office at 87 Murray Guard Drive, Jackson, Tennessee.
26. It was further a part of the scheme and artifice to defraud and to obtain money and funds
by means of false and fraudulent pretenses, representations and promises that the defendant
CLAY MCCORMACK created or directed the creation of a HUD-1 showing the Summary of the
Borrower and Sellers Transactions. In this document defendant CLAY MCCORMACK
indicated Payoff to Commercial Bank for 104 North in the amount of $40,000 and Payoff to
Bank of Jackson for 40 Stratford in the amount of $73,612 occurred at closing.
27. It was further a part of the scheme and artifice to defraud and to obtain money and funds
by means of false and fraudulent pretenses, representations and promises that the defendant
CLAY MCCORMACK had check number 1-3773 filled out as follows; the check was dated April
22, 2010 written on Teel, McCormack & Maroney, P.L.C. Attorney Real Estate Trust Account
number 41813585, made payable to The Bank of Jackson in the amount of $73,612 with (508)
Payoff to The Bank of Jackson for 40 Stratford File: 20100402 written in the memo section.
28. It was further a part of the scheme and artifice to defraud and to obtain money and funds
by means of false and fraudulent pretenses, representations and promises that the defendant
CLAY MCCORMACK had check number 1-3774 filled out as follows; the check was dated April
22, 2010 written on Teel, McCormack & Maroney, P.L.C. Attorney Real Estate Trust Account
number 41813585, made payable to Commercial Bank & Trust in the amount of $40,000 with
8
(506) Payoff to Commercial Bank for 104 North -$40,000 File: 20100402 written in the memo
section.
29. It was further a part of the scheme and artifice to defraud and to obtain money and funds
by means of false and fraudulent pretenses, representations and promises that the defendant
CLAY MCCORMACK had check number 1-3775 filled out as follows; the check was dated April
22, 2010 written on Teel, McCormack & Maroney, P.L.C. Attorney Real Estate Trust Account
number 41813585, made payable to JAMES LEE BISHOP in the amount of $40,000 with (506)
Payoff to Commercial Bank for 104 North - $40,000 File: 20100402 written in the memo
section.
30. It was further a part of the scheme and artifice to defraud and to obtain money and funds
by means of false and fraudulent pretenses, representations and promises that the defendant
CLAY MCCORMACK had check number 1-3776 filled out as follows; the check was dated April
22, 2010 written on Teel, McCormack & Maroney, P.L.C. Attorney Real Estate Trust Account
number 41813585, made payable to JAMES LEE BISHOP in the amount of $73,612 with (508)
Payoff to The Bank of Jackson for 40 Stratford File: 20100402 written in the memo section.
31. It was further a part of the scheme and artifice to defraud and to obtain money and funds
by means of false and fraudulent pretenses, representations and promises that the defendant
CLAY MCCORMACK instructed an employee to void and cancel check numbers 1-3773 and 1-
3774 on May 11, 2010.
32. It was further a part of the scheme and artifice to defraud and to obtain money and funds
by means of false and fraudulent pretenses, representations and promises that on or about April
22, 2010, JAMES LEE BISHOP endorsed and deposited check numbers 1-3775 and 1-3776
into accounts under his control.
33. It was further a part of the scheme and artifice to defraud and to obtain money and funds
by means of false and fraudulent pretenses, representations and promises that the defendant
9
CLAY MCCORMACK accepted funds at closing in amount of $97,144.54 from JAMES LEE
BISHOP as cash from the borrower.
34. It was further a part of the scheme and artifice to defraud and to obtain money and funds
by means of false and fraudulent pretenses, representations and promises that the defendant
CLAY MCCORMACK created or directed the creation of a HUD-1 showing the Cash from
Borrower in the amount of $97,144.54 was paid by DRW Investments, LLC (the borrower) full
well knowing that this payment had been made by BISHOP (the seller.) Defendant CLAY
MCCORMACK also filled out the Summary of the Borrower and Sellers Transactions indicating
Payoff to Commercial Bank for 104 North in the amount of $40,000 and Payoff to Bank of
Jackson for 40 Stratford in the amount of $73,612 occurred at closing.
35. On or about April 22, 2010, in the Western District of Tennessee the defendant
-------------------------------------------------CLAY MCCORMACK-------------------------------------------------
did knowingly with other persons known and unknown to the Grand Jury, obtain money and
funds by means of false and fraudulent pretenses, representations and promises as set forth
above, in that he completed or directed the creation of a fraudulent HUD-1 indicating that
$40,000 would be paid to Commercial Bank as a payoff of the first mortgage loan on 104 North,
Jackson, TN and that $73,612 would be paid to Bank of Jackson as a payoff of the first
mortgage loan on 40 Stratford, Jackson, TN when in truth and fact he converted the $40,000
and $73,612 for himself and others.
All in violation of Title 18, United States Code, Sections 1344.
COUNT 3
(FALSE STATEMENT)
36. All of the allegations contained in paragraphs 1 through and including 12 of this
Indictment are re-alleged and incorporated by reference as if fully set forth herein.
10
37. From on or about July 17, 2009, to on or about July 20, 2009, in the Western District of
Tennessee and elsewhere, the defendant,
-------------------------------------------------CLAY MCCORMACK-------------------------------------------------
in a matter within the jurisdiction of the United States Department of Justice, did knowingly and
willfully make a false, fictitious, and fraudulent material statement and representation, as
summarized below:
A. On or about July 17, 2009, in Jackson, Tennessee, the defendant CLAY
MCCORMACK created or directed the creation of a HUD-1 showing the Summary of
the Borrower and Sellers Transactions. In this document, the defendant CLAY
MCCORMACK indicated the Cash from Borrower payment of $8,613.28 was paid by
H&H Properties(the borrower) full well knowing the amount was provided by Premier
Funding Group, LLC (registered agent JAMES LEE BISHOP (the seller). In this
document, the defendant CLAY MCCORMACK also indicated the Payoff of first
mortgage loan to the Bank of Jackson in the amount of $36,000.
B. The defendant CLAY MCCORMACK had check number 1-1057 filled out as follows:
the check was dated July 17, 2009, written on Teel, McCormack & Maroney, P.L.C.
Attorney Real Estate Trust Account number 41813585, made payable to the Bank of
Jackson in the amount of $36,000 with (504) Payoff of first mortgage loan to the
Bank of Jackson-File: 20090754 written in the memo line.
C. The defendant CLAY MCCORMACK instructed an employee to void and cancel
check number 1-1057 on July 20, 2009, and on the same date check the defendant
CLAY MCCORMACK ordered the same employee to create number 1-1100 from
the above account payable to Lee Bishop in the amount of $36,000 with (504)
Payoff of first mortgage loan to The Bank of Jackson-File: 20090754 again written in
the memo line of the check.
D. The defendant CLAY MCCORMACK signed the HUD-1 knowing it was false.
11
All in violation of Title 18, United States Code, Section 1001.
COUNT 4
(FALSE STATEMENT)
38. All of the allegations contained in paragraphs 1 through and including 12 of this
Indictment are re-alleged and incorporated by reference as if fully set forth herein.
39. From on or about April 22, 2010, to on or about May 11, 2010, in the Western District of
Tennessee and elsewhere, the defendant,
-------------------------------------------------CLAY MCCORMACK-------------------------------------------------
in a matter within the jurisdiction of the United States Department of Justice, did knowingly and
willfully make a false, fictitious, and fraudulent material statement and representation, as
summarized below:
A. On or about April 22, 2010, in Jackson, Tennessee, the defendant CLAY
MCCORMACK created or directed the creation of a HUD-1 showing the Summary of
the Borrower and Sellers Transactions. In this document, the defendant CLAY
MCCORMACK indicated the Cash from Borrower payment of $97,144.54 was paid
by DRW Investments, LLC (the borrower) full well knowing the amount was provided
by BISHOP (the seller). In this document, the defendant CLAY MCCORMACK also
indicated Payoff of Commercial Bank for 104 North in the amount of $40,000 and
Payoff to the Bank of Jackson for 40 Stratford in the amount of $73,612.
B. The defendant CLAY MCCORMACK had check number 1-3774 filled out as follows:
the check was dated April 22, 2010, written on Teel, McCormack & Maroney, P.L.C.
Attorney Real Estate Trust Account number 41813585, made payable to the
Commercial Bank & Trust in the amount of $40,000 with (506) Payoff to Commercial
Bank for 104 North-File: 20100402. Defendant had check number 1-3773 filled out
12
as follows: the check was dated April 22, 2010, written on Teel, McCormack &
Maroney, P.L.C. Attorney Real Estate Trust Account number 41813585, made
payable to The Bank of Jackson in the amount of $73,612 with (508) Payoff to The
Bank of Jackson for Stratford-File: 20100402.
C. The defendant CLAY MCCORMACK had check number 1-3775 filled out as follows:
the check was dated April 22, 2010, written on Teel, McCormack & Maroney, P.L.C.
Attorney Real Estate Trust Account number 41813585, made payable to Lee Bishop
in the amount of $40,000 with (506) Payoff to Commercial Bank for 104 North-File:
20100402. The defendant CLAY MCCORMACK had check number 1-3776 filled
out as follows: the check was dated April 22, 2010, written on Teel, McCormack &
Maroney, P.L.C. Attorney Real Estate Trust Account number 41813585, made
payable to Lee Bishop in the amount of $73,612 with (508) Payoff to The Bank of
Jackson for Stratford-File: 20100402.
D. The defendant CLAY MCCORMACK instructed an employee to void and cancel
check numbers 1-3773 and 1-3774 on May 11, 2010.
E. The defendant CLAY MCCORMACK signed the HUD-1 knowing it was false.
All in violation of Title 18, United States Code, Section 1001.
FORFEITURE ALLEGATION
Upon conviction of one or more of the offenses alleged in Counts 1 and 2 of this
Indictment the defendant, CLAY MCCORMACK, shall forfeit to the United States pursuant to 18
U.S.C 981(a)(1)(c) and 28 U.S.C 2461 any property constituting or derived from proceeds
obtained directly or indirectly as a result of the Bank Fraud charge in Counts 1 and 2.
1. MONEY JUDGMENT
13
A sum of money equal to $ 3,823,366.68 in United States funds representing the
amount involved in the Bank Fraud charge in Counts 1 and 2.
2. SUBSTITUTE ASSETS
If any of the above described forfeitable property, as a result of any act of omission
of the Defendant:
A: cannot be located upon the exercise of due diligence;
B: has been transferred or sold to, or deposited with, a third party;
C: has been placed beyond the jurisdiction of the court;
D: has been substantially diminished in value; or
E: has been commingled with other property which cannot be divided without
difficulty; it is the intent of the United States, pursuant to 21 U.S.C 853(p) as
incorporated by 18 U.S.C 982(b), to seek forfeiture of any other property of said
defendant up to the value of the forfeitable property as described above all pursuant
to 18 U.S.C 981 (a)(1)(c) and 28 U.S.C 2461 (c).
A TRUE BILL __________________________ F O R E P E R S O N DATE: ______________________________ EDWARD L. STANTON III UNITED STATES ATTORNEY ____________________________________ VICTOR L. IVY ASSISTANT UNITED STATES ATTORNEY
}bk1{Form 6. Summary of Schedules}bk{
United States Bankruptcy CourtWestern District of Tennessee
In re
,Debtors
Case No.
Chapter
11-12409
7
Clay Morton McCormack,Sally Jo McCormack
B6 Summary (Official Form 6 - Summary) (12/07)
Indicate as to each schedule whether that schedule is attached and state the number of pages in each. Report the totals from Schedules A,B, D, E, F, I, and J in the boxes provided. Add the amounts from Schedules A and B to determine the total amount of the debtors assets.Add the amounts of all claims from Schedules D, E, and F to determine the total amount of the debtors liabilities. Individual debtors mustalso complete the "Statistical Summary of Certain Liabilities and Related Data" if they file a case under chapter 7, 11, or 13.
SUMMARY OF SCHEDULES
ATTACHED NO. OFNAME OF SCHEDULE ASSETS LIABILITIES OTHER(YES/NO) SHEETS
A - Real Property
B - Personal Property
C - Property Claimed as Exempt
D - Creditors Holding Secured Claims
E - Creditors Holding UnsecuredPriority Claims
F - Creditors Holding UnsecuredNonpriority Claims
G - Executory Contracts andUnexpired Leases
H - Codebtors
I - Current Income of IndividualDebtor(s)
J - Current Expenditures of IndividualDebtor(s)
Total Number of Sheets of ALL Schedules
Total Assets
Total Liabilities
(Total of Claims on Schedule E)
Software Copyright (c) 1996-2011 - CCH INCORPORATED - www.bestcase.com Best Case Bankruptcy
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
1 0.00
4 45,546.50
2
22,542.261
75,000.002
9,237,359.4615
1
5
1 5,075.20
1 7,539.00
33
45,546.50
9,334,901.72
Case 11-12409 Doc 22 Filed 08/25/11 Entered 08/25/11 16:30:15 Desc Main Document Page 1 of 54
IN THE UNITED STATES DISTRICT COURTFOR THE WESTERN DISTRICT OF TENNESSEEEASTERN DIVISIONINDICTMENTTHE GRAND JURY CHARGES:INTRODUCTIONOBJECT OF THE SCHEME AND ARTIFICEMANNER AND MEANS OFOVERT ACTSAll in violation of Title 18, United States Code Section 1344.All in violation of Title 18, United States Code, Sections 1344.All in violation of Title 18, United States Code, Section 1001.COUNT 4(FALSE STATEMENT)