In a tightknit neighborhood, where people’s social lives often revolve around their churches, Beulah Penn and her daughter, Sharon, were well-connected and trusted. Beulah Penn was a lay minister in a local church; her daughter, Sharon Penn, dressed hair.The Penns persuaded friends and members of their church to join an "investment club" to purchase homes in Indiana. They were told they didn't have to contribute any money, but would be paid $2,000. The scammers arranged to purchase homes at market rates, get bogus inflated appraisals and mortgages at the higher amount, then pay the market rate for the home and divert the rest of the funds to themselves.Using these connections, according to a recent lawsuit, the two women and another relative in Indianapolis perpetrated one of the largest mortgage frauds in American history, victimizing dozens of local residents and, according to sources with knowledge of the accusations, at least $40 million in fraudulent loans — perhaps even twice that amount.
“Looking back, maybe it sounded too good to be true, but everyone knew them, and my friends went to church with them, people I been knowing for 10 years,” said Timothy Jacobs, a 29-year-old worker in a fiber-optics factory who discovered recently that he owed $200,000 on two houses in Indiana. “They said they’d be responsible for everything. Now everyone’s probably going to end up filing for bankruptcy.”
One of those who joined the "investment club" found out about how the scam worked when he was turned down for a $1,000 loan from his credit union to buy Christmas presents--he discovered he owned five homes in Indiana with mortgages adding up to nearly $1 million, all of which were in default.
I expect a lot more cases like this will make the news as the housing market continues to decline.
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