Bogus loan packages created on fictitious borrowers
By SAM GARCIA
7/15/2002

A Tennessee mortgage broker and her employee have pled guilty to defrauding two lenders out of more than $6 million, according to an announcement from the U.S. Attorney's office. The two were allegedly involved in schemes where they would obtain funding for fictitious or fraudulent loans using bogus loan packages.

The case involved Apple Tree Mortgage, Inc., a Kingsport, Tennessee mortgage brokerage owned and operated by Shirley Harwood, 47. According to the 17-count indictment, between July 1998 and December 1999, Harwood devised a scheme where she would use false documentation and signatures to create fictitious loan files.

In 1998, Harwood opened a $3 million warehouse line of credit with Union Planters Bank, according to the indictment. By creating fake loan documents, Harwood, who also owned and operated Fidelity Title Company, Inc. in Kingsport, was able to obtain more than $2 million in warehouse funds from Union Planters. Once she fraudulently obtained the loan proceeds, Harwood would use domestic and foreign accounts to launder the money.

The fake loans ranged in size from $75,000 to $348,750.

A second, 12 count indictment alleged Harwood and former employee and coconspirator Dennis Ray Sutherland Jr., 30, used fraudulent documents to originate a $4.5 million loan through Credit Suisse of Zurich, Switzerland. Currently, more than $4 million of that loan is in default. The Elizabethton Star recently reported that Harwood and Sutherland fraudulently induced Credit Suisse to fund the loan to HelveStar, a Swiss company. That story went on to say the two pretended to be Bank of America authorizing officials so they could vouch for the authenticity of the documents. Harwood reportedly received $200,000 in commissions for brokering the loan, of which she gave Sutherland $10,000.

Harwood pled guilty to eleven counts on June 3, 2002 and is free on bond awaiting an August 5th sentencing date.

Sutherland previously pleaded to the conspiracy charge, according to the Star.

Apple Tree's website is still active at the following URL:

http://www.AppleTreeMortgageInc.org

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