Second City student improv performer Meghan Ross took all the obvious steps when her wallet was snatched in a crowded bar three years ago.
Grabbing a cell phone, the 22-year-old canceled her credit cards and filed a police report. She woke her mother for advice.
She made follow-up inquiries over the next few days, then figured the ordeal was over, costing her the $40 in cash she lost.
Sixteen months later, in April 2004, a private detective tracked down Ross’ parents and handed them a sheaf of court papers. Ross was being sued by giant lending companies based in New Jersey, California and Pennsylvania.
It turns out that her wallet had been filched by a sophisticated mortgage fraud crew.
Ross’ story shows how something as simple as a stolen wallet–which used to mean somebody might run up a tab of a few hundred dollars at a nearby store–can plunge a victim into a world of high-stakes fraud involving people and places never heard of and sums never imagined.
Told in land records, interviews and internal loan company files, her ordeal also shows how the booming crime of mortgage fraud can play out beyond the reach of law-enforcement and lenders’ safeguards.
Using Ross’ identity in an audacious series of face-to-face scams, con artists secured home loans worth $412,300 on three West Side buildings that they didn’t own.
Ross now has been sued by three lending companies seeking full repayment. Her family has paid about $10,000 in legal bills fending off those claims. And her good credit has been shredded–she can’t rent an apartment or lease a car without her parents co-signing.
Ross met with several law-enforcement agencies but got little help. At one meeting, she recalls a Chicago police detective advising her to dye her hair and move out of town: “He told me, `These people are dangerous.'”
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Chicago police spokeswoman Monique Bond said Ross’ case is closed, and it is not clear who the detectives were, but Bond said she could not imagine an officer saying that to a victim.
Following a trail from Ross’ credit report through land records to title company documents to a title company, a Tribune reporter was able to trace Ross’ stolen identity in less than two weeks.
Her identity was assumed by a 37-year-old check forger, Freddie “Knucklehead” Johnson, who was already on the lam when he began using her name in real estate transactions, the Tribune found.
On June 4, 2003, Johnson was scheduled to report to federal prison to begin a 15-month sentence for taking part in a conspiracy that used counterfeit checks to buy race car engines, jewelry and pit bull dogs. Johnson failed to show up at prison, federal court records show, and a judge immediately issued a warrant for his arrest.
But bank records indicate that he was still in Chicago.
A week after Johnson disappeared, on June 11, 2003, he endorsed and deposited one $75,818 mortgage check from the “Ross” closings in an account at a West Side bank, records examined by the Tribune show.
Two more deals followed within the next month. Johnson remains a fugitive, federal court records show.
Like Ross, the actual owners of the three West Side homes were plunged into legal and financial chaos.
The family of 75-year-old Ruth Williams spent personal funds–she declined to say how much–to clear the title to her brick two-story home at 4830 W. Arthington St.
“I got mine straightened out,” Williams said. “I don’t know about the others.”
Two doors west, the owner of 4834 W. Arthington St. managed to forestall the court sale of his property. But Corey Latimer can’t sell his building or borrow against it because a lending company hasn’t released the phony mortgage.
“The house is just sitting there with a cloud on the title,” said Latimer’s attorney, Dennis Kral.
About a mile southeast stands the once-sturdy three-story at 1653 S. Kedvale Ave.
That building’s owner never stepped forward to assert his claim in the tangle of litigation that followed the third phony “Ross” mortgage. Now that property is headed for a court-ordered sale to repay the bank left holding the fraudulent loan.
While traditional theft and forgery laws should protect all these victims, the complexity of mortgage fraud leaves law enforcement struggling to keep up. In addition to the police, Ross brought her case to the FBI, the U.S. Secret Service, the Federal Trade Commission, the U.S. Customs Service and the Cook County state’s attorney’s office. None has contacted her for more than a year, she said.
“They’re done with us,” Ross said.
A wallet disappears
It was just below freezing but dry and nearly windless on the December night in 2002 when Ross and her troupe stepped across the street to the Old Town Ale House, piling their coats on a chair. Minutes later, she and another woman reached for their wallets and came up empty.
Ross agreed to talk about what happened next despite concerns that she might provoke further retribution from the swindlers, all of whom apparently are still at large.
Ross’ mother, Eileen Ross, is vice president and general manager of a real estate firm that specializes in industrial property. But even her expertise and industry connections were of little help.
Because the actual Meghan Ross did not take part in the land deals, her lawyers had no standing to obtain the confidential closing files that would show where the $412,300 in mortgage funds went.
“I can’t find out who the broker was, who did the closing. But the lending companies sue Meghan,” Eileen Ross said.
There are clues in Ross’ credit report. Under a listing of her employers was a mysterious West Side company called RM Developers LLC.
Ross had never heard of the place. But her credit report showed that she started working there in May 2003, about six months after her wallet was filched.
State records show that counterfeiter Freddie Johnson created RM in 2002, shortly after his fourth forgery conviction. The three buildings were sold to “Ross” in June and July of 2003.
Lending firms ignored obvious signs of fraud as they hurried to sign loans they could quickly resell to stock investors.
Two closing packages included a photocopy of a driver’s license with Ross’ name on it. But the picture on the license is of a black woman with brown eyes–Ross is white with green eyes–and the license has no number assigned by the secretary of state.
The mortgage papers filed by one loan company said this “Ross” lived at 4620 W. Arthington St., while another lending firm listed “Ross” as living a mile east, at 3820 W. Arthington. In fact, both addresses were vacant lots.
Documents show that the closings for the three fraudulent “Ross” mortgages also were attended by a downtown attorney and a loan officer at a now-shuttered mortgage brokerage.
Lawyer Lorie Westerfield’s name is on the three “Ross” loan closing packages, as the title agent, a notary who verified signatures and attorney for the purported sellers.
Westerfield, who maintains a busy downtown bankruptcy and real estate law practice while investing in Chicago property, declined to comment. She faces civil fraud allegations in an unrelated lawsuit brought by a West Side family who claim she helped orchestrate a mortgage scheme that cost them their home. Westerfield has not yet filed court papers in response to that civil lawsuit.
Federal agents raid offices
Records show that the three “Ross” mortgage applications were prepared by a loan officer from Express Mortgage, a rapidly growing Chicago loan brokerage that submitted mortgage applications to banks and lending companies. Express received $13,800 in fees.
Federal agents raided Express’ offices in 2004 as part of an ongoing criminal probe, and the company closed last year amid tax debts and civil court allegations of fraud.
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The Express loan officer listed on the Ross loans, 32-year-old Owen Pittman, was at the time serving probation for a felony weapons conviction. Pittman remained in the home loan business, holding a state provisional loan originator license from August 2004 through June 2005, when that license expired. He could not be located for comment.
In the documents from the first “Ross” transaction on June 10, 2003, a person posing as West Sider Ruth Williams sold 4830 W. Arthington St. to a person posing as Ross.
The real Ruth Williams had no idea the sale was taking place.
Williams’ address was given as 6058 W. North Ave., which was actually the headquarters of Elite Mortgage Services, a loan company that worked with Westerfield on other deals.
A handwritten “letter of direction,” purportedly signed by Williams, assigned all sale proceeds to RMD LLC, a variant name of the company created by forger Freddie Johnson.
A day later, Johnson endorsed the $75,818 check and deposited it into a Community Bank of Lawndale account. The check cleared a day after that, records show.
The second sale and mortgage closing took place one day after that, on June 13, 2003.
This time, someone posing as Ross borrowed $114,300 to buy the brick two-story at 4834 W. Arthington St.
Building owner Corey D. Latimer’s home address was listed as 1336 S. Komensky Ave., which is actually a vacant lot.
The real Latimer couldn’t have attended the sale and mortgage closing since at the time he was incarcerated at Dodge Correctional Institution in Wisconsin for an armed robbery conviction, court records show.
Latimer also purportedly signed a handwritten “letter of direction,” this time diverting his $104,398 payout check to a 59-year-old Flossmoor resident named “Richard M. Preston,” who had no role in the deals. The Tribune could locate no such person.
The third mortgage closing, for a brick three-story apartment building at 1653 S. Kedvale Ave., was held a few weeks after the Latimer sale. This time, “Richard Preston” cashed a $177,511 mortgage check.
In October 2004, city attorneys cited the building with dangerous housing code violations and put it on the fast track for demolition. City attorneys said in court that the untended shell was being used by squatters and drug dealers.
The company holding the fraudulent mortgage loan, Deutsche Bank National Trust Co., filed a court objection to the building’s demolition, and the property is scheduled for a court-supervised foreclosure sale.
The mortgage placed in her name on that building has continued to haunt Ross. In October, the city of Chicago sent her an unpaid $715 water bill from the property.
Ross treated it as one more hassle in the ongoing mess. Now 25, she graduated from college with perfect credit. When she took out a loan to buy her first car, she didn’t need a co-signer. She calls those days “such a long-ago memory.”
Today, Ross said, “credit card companies won’t talk to me, because they don’t know it’s me.”
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