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Friday, Jerry Kerley, 58, of Kodak and Jeffrey Whaley, 48, of Sevierville, were convicted by a jury in U.S. District Court, Knoxville, of all counts, including wire fraud, bank fraud, money laundering and conspiracy to commit wire fraud and bank fraud.
Kerley and Whaley were charged with conspiring to defraud Citizens Bank, in New Tazewell and SunTrust Mortgage, Inc., in Richmond, Va., through a mortgage fraud scheme.
U.S. District Judge Thomas W. Phillips, scheduled Kerley’s and Whaley’s sentencings for Sept. 27.
Kerley and Whaley could receive sentences of up to 30 years in prison and a $1 million fine for each count of their convictions for wire fraud, bank fraud and conspiracy convictions.
They could also each receive sentences of up to 10-years in prison and a $250,000 fine for their money laundering convictions.
Both men are also subject to the imposition of an order of forfeiture for any proceeds obtained from the fraud and an order of restitution for losses sustained by Citizens Bank and SunTrust Mortgage.
The conspiracy involved a “straw borrower” mortgage fraud scheme in which individuals were induced to obtain mortgage loans in their names based on promises that they would not have to make a down payment or mortgage payments for the property, would receive cash at closing and would share in the profit following a resale of the property.
In eight real estate transactions, Kerley and Whaley concealed from Citizens Bank and SunTrust Mortgage that the borrower did not provide the money at closing identified as the “cash from borrower” on the HUD-1 Settlement Statement.
In those eight transactions, Citizens Bank and SunTrust Mortgage, in total, wired more than $6 million in loan proceeds to Guaranty Land Title Company for disbursement.
Kerley and Whaley were also charged with money laundering offenses through financial transactions that involved proceeds from the mortgage fraud scheme.
Kerley, a Tennessee licensed attorney, was the owner of Guaranty Land Title Company where the fraudulent loans were closed.
Whaley conducted business through a company known as GBO Enterprises which received substantial sums of money from the loan proceeds.
The investigation was conducted jointly by the Internal Revenue Service, Criminal Investigation, Federal Bureau of Investigation, and the United States Secret Service. Assistant U.S. Attorneys Trey Hamilton and Zac Bolitho represented the government.
- From Contributed Reports
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