A former loan officer, escrow agent and straw buyer who have pleaded guilty as part of a deal with federal authorities say they helped Clint Rogers launder millions of dollars through his ministry.
In a plea agreement made public this week, former Scottsdale loan officer Ernest Babbini told prosecutors that he submitted $5.5 million in phony mortgage-loan documents on 15 homes purchased by Rogers and his wife, Angela Faith Rogers.
The plea agreements provide insight into a form of mortgage fraud commonly referred to by authorities as a cash-back operation, in which participants lie on applications about home values, transfer title from one buyer to another while obtaining loans on the bloated price and then pocket the difference.
Babbini, along with former Scottsdale escrow agent Drew Hull and Tempe homebuyer Shannon Kato, admitted in court documents that they used “double escrow” transactions and sales to bogus family trusts in order to artificially inflate the values of the properties and hide the identity of the purchaser from banks.
Clint Rogers is the head of Mesa-based Clint Rogers Ministries and conducts faith-healing events at churches throughout the United States, Africa, Asia, Europe and elsewhere. He and his wife are scheduled for trial on Valentine’s Day 2012.
“My client has always maintained his innocence and does so to this day,” Rogers’ lawyer, Eric Kessler, said this week.
Rogers and his wife were indicted by a federal grand jury in March, accused of fraudulently obtaining $5.5million in financing for 15 homes bought in 2006 and 2007. Authorities say they got about $2.5million in cash, which they concealed in ministry accounts.
Federal authorities said the case against the Rogerses is significant because of the number of homes involved and the amount of cash they generated. They said the defendants obtained anywhere from $113,000 to $530,000 in cash back from each home sale.
The couple’s home purchases were detailed in a 2009 investigation by The Arizona Republic, which found that they bought 26 homes in less than two years and that nearly all of them went into foreclosure.
Property records show that Rogers and his wife bought homes that other sellers had purchased for thousands of dollars less just hours, days or weeks earlier. Records show that 15 of the homes were sold to Rogers by Tempe resident Shannon Kato.
In an October plea agreement, Kato said his role in the scheme was to act as the straw buyer, purchasing homes in his name, the name of his company or a fictitious family trust.
“So, it would appear that I had purchased the property from the seller, and then turned around and sold it at a higher price to Clint Rogers, Angela Rogers, another Rogers family member or a Rogers-controlled entity,” Kato said in court documents.
One of the homes was among those detailed by The Republic in 2009. Property records show that Kato purchased a house on Merion Way in Paradise Valley on May 3, 2006, for $1.4 million. On the same day, Kato sold the home to Clint Rogers for more than $1.9 million. The house was foreclosed on and sold in April 2008 for $1.35 million.
In his plea agreement, Kato said he once signed a home-warranty deed claiming to be a trustee of the Whistle Family Trust in order to sell a home from F. Whistle to Clint Rogers.
“The Whistle Family Trust did not exist,” Kato admitted in court documents. “This was a way to artificially inflate the sales price that would be financed and conceal cash back to Clint Rogers.”
Kato described how a settlement statement provided to the bank for one home sale showed that Rogers would receive $420 cash on the purchase without disclosing that $529,804 had gone to World Holdings LLC, a company Rogers controlled.
In her plea agreement, Hull said they submitted simultaneous loan applications to keep lenders from discovering multiple home purchases. She said applications listed false income and lied about occupancy in order to get the loans.
“I had incentive to close the deals because I would receive extra compensation from the escrow company in the form of bonuses,” Hull said in court documents.
Rogers’ lawyer declined to discuss the plea agreements. But, in a May court filing, he said Rogers was a victim of fraud and pointed the finger at Kato, Babbini and Hull.
Rogers, in court documents, said Kato encouraged him to get involved in what he believed was a legal real-estate investment. He said Kato was the one who set up the “double escrow” deals and created the trusts. Rogers maintained that he sought legal advice to ensure it was not against the law.
Rogers said Babbini in some cases forged his signature on the loan documents without his knowledge. Rogers also maintained that Hull worked directly with Kato and Babbini to create the phony trusts and fraudulent loan documents.
Rogers and his wife have been charged with 13 counts of conspiracy, money laundering and wire fraud.
In exchange for pleading guilty and cooperating with authorities, Babbini, Kato and Hull will be charged with one felony count of conspiracy. They each face up to a $250,000 fine, five years in prison and five years’ probation.