ID theft gins up house loan
The thief gets to keep the home, and the Tampa broker is unscathed - again.
By Jeff Testerman, Times Staff Writer
Published February 12, 2008
TAMPA - A few months ago, a state investigator visited mortgage broker Dominic Ferrara to discuss a case of mortgage fraud.
An Oregon man's identity had been stolen and his Social Security number used to obtain a mortgage. Ferrara handled the loan. But it wasn't just any loan. It was a 100 percent mortgage for a home that Ferrara's girlfriend was selling. She ended up getting $229,000 for a home valued today at $165,000.
After prosecutors gave Ferrara immunity, he admitted that he falsified a key part of the loan application. The buyer, a handyman with a lengthy criminal record, ended up charged with three felonies. But Ferrara came out smelling like a rose. Again.
Again, because Ferrara has come to the attention of investigators before.
He was questioned in 2001 about money laundering in a mortgage fraud case involving Matthew B. Cox. They were associates in a Tampa firm called Consortium Financial Services. While there, Cox stole a homeowner's identity and used the victim's property to obtain a fraudulent $110,000 loan.
Police questioned Ferrara and another Consortium employee, Johnny Moon Jr., about payments from Cox's illegal proceeds. Cox had given Ferrara a $15,908 check. Ferrara cashed it and gave the money back to Cox.
Ferrara and Moon told police they were unaware of any illegal activity and thought they were just helping Cox hide money from his wife. Ferrara and Moon were not charged. Cox was charged with mortgage fraud and stealing.
Cox went on to become a notorious swindler, making it to the top of the Secret Service's most-wanted list before being captured and imprisoned last year.
Beginning in 2003, Ferrara assisted in a series of property acquisitions by a homeless man, Johnny Moon Sr. With 30 arrests and no job, Moon Sr. sometimes relied on food stamps or theft to eat. Yet he managed to secure mortgages totaling $614,000.
Ferrara and Moon Jr. helped grow the homeless man's real estate empire. The son used a power of attorney to sell one property. Ferrara witnessed and notarized the power of attorney, as well as deeds executed by the elder Moon. Ferrara also helped collect the rent for some tenants at Moon Sr.'s properties, insisting payment be made in cash, according to one renter.
In July 2005, at age 56, Moon Sr. died of pneumonia brought on by malnutrition. His pockets contained a single dollar bill.
Two months later, Ferrara handled the loan application for a man named Malcolm Hepburn ... who had stolen the identity of another Malcolm Hepburn.
The Hepburn who came to Ferrara is a handyman who needed a mortgage to buy a 1,700-square-foot home in Riverview.
The seller was 29-year-old Tracie Inman. She is the half-sister of Moon Jr. and president of Ferrara's mortgage company, Direct Home Loan. At the time, she was Ferrara's girlfriend.
In a jailhouse interview with the St. Petersburg Times after his arrest on mortgage fraud and theft charges, Hepburn said the deal was all Ferrara's idea.
"Dominic offered the house to me," Hepburn said. "He said his girlfriend wanted to sell so she could move in with him. He said he could get me a mortgage for no money down."
That's just what Ferrara did, though the price was steep.
Inman's home at 10918 Fenway Glen Court has a current market value of about $165,000, according to the county property appraiser. Hepburn paid $229,000 and borrowed $229,000.
When Ferrara was done with the loan application, it showed Hepburn had sufficient income to handle that big price. Hepburn, the papers said, was pulling down as much as $112,000 a year as an air conditioning technician for a company owned by a man named Harold Locke.
Hepburn signed the papers, got his loan and moved his family into Inman's Riverview home.
Two months after that closing, Ferrara bought a new home in Riverview for $388,500. Ferrara and Inman live there now as husband and wife. They were married in Tennessee in late 2006.
All was well until shortly before Memorial Day last year, when a machinist in Oregon, one Malcolm Hepburn, asked for a new line of credit. His credit union said no.
The credit union said he was carrying too much debt, mostly because of the $229,000 loan in Florida. Hepburn and his wife, Pam, checked their credit report. There it was: a $229,000 mortgage with the Oregon Hepburn's Social Security number on it.
Pam Hepburn called Chase Mortgage, the company that held the Florida loan, and told them she knew nothing about it. "Are you sure?" she recalls the lender asking. "Do you know everything your husband has been up to?"
Pam Hepburn knew her husband had never even been to Florida. Someone had stolen his identity.
The couple filed a police report. It ended up with Joseph L. Wilson, an investigator with the Florida Office of Financial Regulation. Wilson tracked down the Tampa mortgage broker who had handled the application for the $229,000 loan.
Ferrara seemed eager to help. He said he knew the Hepburn who had made the loan application because the handyman had done some work on Ferrara's properties. Ferrara added that he believed Hepburn was also an air conditioning repairman.
The investigator determined that the Oregon Malcolm Hepburn was 51, white, 5-foot-8, 225 pounds. The Malcolm Hepburn who signed for the loan with Ferrara and now lived in Riverview was 57, black, 5-foot-10, 148 pounds.
The Riverview Hepburn had an arrest record for worthless checks, drugs, forgery, possessing stolen property, fraudulent use of driver's licenses. He got five years in prison for a California bank fraud conviction involving stolen credit cards.
The Oregon Hepburn's record was clean.
The investigator confirmed that the Social Security number on the Riverview loan application belonged to the Oregon Hepburn. That cinched it. He arrested the Riverview Hepburn.
In court papers after his arrest, Hepburn said he took home $400 to $800 a week, less than half what his loan employment verification said.
In his jailhouse interview, he pointed the finger at Ferrara. He said that portion of the loan application had been made up. He didn't do air conditioning repair work, and he didn't know Locke, the man who verified the six-figure income for Hepburn.
But Ferrara knew Locke. Locke had done repair jobs for Ferrara, Locke said, and Ferrara had handled some mortgage financing for him. Locke told investigators that his signature on the employment verification form was a forgery.
Asking to reduce Hepburn's bail, his attorney raised the issue of Ferrara's credibility.
"The merits of the state's case are in jeopardy because their linchpin witness is involved in numerous suspect real estate transactions and himself should be or is under investigation," said the motion from defense attorney Michael Maddux.
Assistant State Attorney Michael Lennon reinterviewed Ferrara to see if evidence might emerge clearing Hepburn. After the prosecutor gave Ferrara immunity for his testimony, he admitted falsifying the employment section of the loan application.
Because Ferrara changed his story, and because the victim in Oregon did not want to travel to Tampa for a trial, the state made a deal. The charges were reduced. Hepburn admitted stealing the Social Security number used on the loan application and was sentenced to five years' probation. He must perform 200 hours of community service and pay $1,000 to the Oregon victim to repair his credit.
Neither Ferrara nor Inman would consent to an interview for this story.
Ferrara's attorney, Donald Harrison, suggested the employment verification was not crucial to the loan's approval. He said the mortgage is current, so nobody has been damaged.
The Oregon Hepburns don't buy that, given all they've been through to straighten out the mess from Florida. They think it's too bad Ferrara walked away free.
Pam Hepburn recalls the first thing her husband said after the couple found out his identity had been stolen to help secure the fraudulent $229,000 loan.
"Any mortgage broker with a brain would never have made that loan," he said. "The broker has to be in on it."
Times researcher John Martin contributed to this report. Jeff Testerman can be reached at firstname.lastname@example.org or 813 226-3422.
Mortgage broker Dominic Ferrara handled a $229,000 loan obtained by Malcolm Hepburn. Given immunity, Ferrara admitted that he falsified the employment verification section of Hepburn's loan application. The loan helped Ferrara's girlfriend sell her home at a premium price.