On January 26, 2010, Edward McGee (76), Kenneth O. McGee (50), and Robert Mitchell (43) - of Vandalia, Ohio - and Kamal J. Gregory (35) - of Centerville, Ohio, were sentenced in federal court by U.S. District Judge Michael A. Barrett for their respective roles in an extensive mortgage fraud scheme involving 210 residential properties.

The Greater Dayton Mortgage Fraud Task Force argued the four were part of a conspiracy that operated and controlled various Dayton, Ohio based real estate mortgage and title insurance related businesses and corporations that schemed to defraud 33 mortgage lending institutions out of over $7 million in loan proceeds and other things of value.

Edward McGee, who pleaded guilty to one count of conspiracy to commit money laundering, was sentenced to three years probation and fined $140,000. His son, Kenneth O. McGee, who pleaded guilty to one count of conspiracy to commit mail fraud, wire fraud and money laundering, and one count of conspiracy to commit money laundering, was sentenced to 32 months in prison and fined $12,500. Robert Mitchell, who pleaded guilty to one count of conspiracy to commit mail fraud, wire fraud and money laundering, and one count of conspiracy to commit money laundering, was sentenced to 32 months in prison and fined $12,500. Kamal J. Gregory, who pleaded guilty to one count of conspiracy to commit mail fraud, wire fraud and money laundering, and one count of conspiracy to commit money laundering, was sentenced to 10 months in prison and fined $12,500.

Two others involved in the scheme were previously sentenced. Julian M. Hickman (32) -formerly of Centerville and now living in East Cleveland - pleaded guilty to conspiracy and tax crimes. Hickman was sentenced on December 10, 2009 to 33 months in prison. Jessica A. Zbacnik (42) - of Monroe – who pleaded guilty to one count of conspiracy to commit money laundering and one count of conspiracy to commit mail fraud, wire fraud and money laundering, was sentenced on December 3, 2009 to 30 months in prison.

The Greater Dayton Mortgage Fraud Task Force argued the six operated a scheme in which they actively recruited unsuspecting individuals to buy residential properties, the majority of which were low income, dilapidated and otherwise depressed residential properties, at prices artificially inflated above legitimate fair-market values. The scheme involved financing the purchases with $15 million in mortgage loans obtained through fraud committed against 33 lending institutions. The defendants paid “kickbacks” to the buyers they recruited, promised to pay for all repair costs to the properties, and promised to make the mortgage payments until they located suitable renters. The defendants kept $7 million from the loans for their personal benefit.

The six operated and controlled various real estate, mortgage and title insurance-related businesses and corporations throughout the Greater Dayton area including Commercial Property Advisor Group (CPAG), Diamond Vision Capital Group, First Union Appraisals, Gem City Professional Services (GCPS), Option One Appraisals, JMH Real Estate, River City Appraisers, Alliance Mortgage, Gregory Investments, Inc., KG Enterprises, Mad River Properties, Premier Mortgage Funding of Ohio, Star Point Mortgage, Ohio Financial Group, Mortgages Unlimited, Allied Mortgage, E & A Investments, and KM Investments.

Numerous agencies participated in the Greater Dayton Mortgage Fraud Task Force, in addition to the FBI and IRS, which included: the Ohio Department of Commerce Division of Financial Institutions, the Ohio Attorney General’s Office, the U.S. Postal Inspection Service, the U.S. Department of Housing and Urban Development Office of Inspector General, and the Perry Township Police Department.