Three people were sentenced Friday in U.S. District Court in Lexington for fraudulent efforts to obtain millions of dollars in mortgage loans from 2006 to 2009.
John Howard, 43, of Richmond, was sentenced to 12 months in prison with three years of supervised release. Kevin Mullins, 40, also of Richmond, received four years' probation. Brenda C. Stone, 55, of Versailles, was put on probation for a year.
Howard, a former mortgage loan officer and broker who owns Campus Downs Real Estate, admitted in May to fraudulently obtaining $2.9 million in mortgage loans. He admitted getting 11 loans for five Lexington properties by lying on loan applications and manipulating the filing of liens.
He said he used those tactics to keep lenders from finding out he had borrowed money from other lenders on the same properties, the U.S. Attorney's Office said in May.
Mullins, former head of Republic State Mortgage's Central Kentucky lending operations, admitted he conspired with Howard on four loans totaling more than $900,000. Mullins said he let Howard, whose license had been revoked by state mortgage regulators, use his name to generate mortgage business.
Mullins said he knew that several loans Howard created for clients contained lies about borrowers' finances and home purchase prices, the U.S. Attorney's Office said.
Stone, a former processor at Republic State Mortgage, admitted she processed loan documents for a friend, knowing the documents contained fraudulent statements about the friend's income and whether the friend planned to use the property as a primary residence.
A $225,000 fraudulent loan was issued, according to the U.S. Attorney's Office.
The guilty pleas came after several years of investigation by the FBI and Kentucky Department of Financial Institutions.
"This was an isolated incident involving two former employees who violated the clear values and ethical guidelines we consistently emphasize throughout our company," said Paulina McGrath, president of Republic State Mortgage. "Republic State Mortgage cooperated fully during this investigation, and the additional quality controls we have initiated give us confidence that this will never happen in our company again."