By David Jackson, Chicago Tribune, Chicago Tribune
Dec. 29–Last year state officials sent Deangelo McMahan a certificate worth framing–a provisional mortgage loan originator’s license that allowed him to gather financial records from homeowners and submit applications to banks.
A quick background check might have made them think twice about the 31-year-old dealmaker.
Five months earlier, in April 2004, federal prosecutors had indicted McMahan and two of his brothers for running a curbside heroin, cocaine and marijuana market on Chicago’s West Side.
An informant had fingered McMahan as a leader of the Insane Mafia Vice Lords street gang.
The story of McMahan’s metamorphosis from drug dealer to mortgage executive stretches from Chicago’s West Side to its affluent suburbs and all the way to Russia. It involves allegations of using black market credit card information and the identities of dead people.
McMahan’s provisional mortgage license expired in June 2005, a few weeks before he was convicted of drug-dealing and sent to prison for 4 years. But the trail of real estate deals he left behind offers more evidence that gangs are turning to mortgage fraud as a moneymaker.
Called “the new street hustle” by gang members, mortgage fraud is raking cities like Chicago, as con artists use high-tech identity theft and face-to-face scams to secure six-figure bank loans that are never repaid.
A Tribune report in November showed how alleged Black Disciples gang leader Marvel Thompson used fraudulent mortgages to acquire South Side properties and launder money. Sen. Barack Obama (D-Ill.) pointed to that report when he called for Senate Banking Committee hearings on mortgage fraud in 2006.
McMahan has not been charged with mortgage crimes, and his attorney Michael Mann said he believed McMahan worked “honestly and conscientiously” as a home loan originator and real estate investor starting in the 1990s.
But allegations of fraud emerged from land and court records as well as FBI reports made public during McMahan’s drug trial.
Federal authorities have questioned at least one West Side funeral home director to determine whether McMahan helped gang members use the identities of dead people to apply for home loans.
Sheila D. Reid, president of the House of Branch funeral home at 3125 W. Roosevelt Rd., said she believes McMahan did use numerous dead people’s names and information, but she said she told agents that McMahan got the data from another funeral home, not hers.
That was apparently not his only source of stolen identities.
As part of the drug investigation, federal agents intercepted a shipment of 215 black-market credit card holograms from Russia to one of McMahan’s brothers. Holograms, the shiny rectangles on credit cards that contain coded security data, are prized by identity thieves.
Such sophisticated white-collar crime techniques would be a far cry from McMahan’s hardscrabble youth on the West Side.
In a nine-page FBI statement made following his April 2004 federal narcotics arrest, McMahan acknowledged a youth spent with gangs and said he “used to be a drug dealer, but does not deal drugs anymore.”
According to federal court statements by others convicted in the McMahan drug operation, he and his brothers became gang leaders with a reputation for tough justice–one brother allegedly shot an underling in the hand for smoking crack he should have sold.
By the 1990s, land records show McMahan had also launched a career as a real estate dealmaker.
In one of his first significant property acquisitions, McMahan in 1994 bought the storefront and apartment building at 5941 W. Chicago Ave., where he opened a popular hip-hop boutique called 600 Collections.
Another convicted Vice Lords leader told prosecutors that the three McMahan brothers transacted “large weight” drug deals at the boutique, although attorneys for the McMahans deny it.
In the years that followed, McMahan consummated other land deals with criminals and real estate professionals who accrued civil court judgments for fraud, records show.
One example is the ramshackle two-flat at 1216 S. Avers Ave.
McMahan signed a deed as part of a rapid series of deals that inflated the building’s price before using it to secure a $195,000 loan that went unpaid, the Tribune found.
His cohorts in those 2002 deals had shady reputations: Allentino Hayson, a home rehabber convicted in 2004 of passing a forged check; Marek Maka, a property investor convicted this year for holding counterfeit passports; and Maya Jordan, whose state home appraiser’s license was revoked in 2003 amid civil court allegations of fraud.
The Avers Avenue deals also involved a home at 5718 S. Maplewood Ave., in another string of transactions McMahan orchestrated with his girlfriend, a brother and an attorney named Warren Nickel who was disbarred in 2004. After a series of quick exchanges, that building was used to secure a $250,000 loan that went unpaid.
As McMahan continued to acquire city and suburban properties, he moved up to the next tier of the real estate profession, joining the loan executives who finance property deals.
By 2003, he was a loan officer for a growing South Side firm called Express Mortgage Inc., court records show. Such mortgage brokerages do not lend money. For a fee, they assemble loan applications on behalf of homeowners.
Express generated millions of dollars worth of Chicago-area loans before it was shuttered this year amid tax debts and an ongoing criminal probe.
While McMahan has not been accused of mortgage fraud during his time at Express, a number of his co-workers were. Three separate lending companies have won civil court judgments after alleging that the firm used forged documents and inflated home appraisals in loan applications.
And an Express loan officer named Azureeiah O’Connor was indicted in July for allegedly taking part in criminal mortgage fraud schemes. O’Connor, who has pleaded not guilty, declined to comment.
From the ashes of Express, a new mortgage broker company was born, McMahan told the FBI.
The Express office at 1234 S. Michigan Ave. changed names to New Family Mortgage.
Mortgage deals orchestrated at New Family helped that brokerage’s putative owner, Kelly Husband, buy the well-known nightclub Shark Bar.
In a separate action against the nightclub, Chicago police disclosed in December 2004 that Husband’s spouse–allegedly the man in control of New Family Mortgage–was under federal investigation for money laundering and bank fraud.
Around December 2003 McMahan took a new job as a $70,000-a-year loan officer at yet another mortgage firm, based in Homewood, according to bankruptcy papers he later filed.
It isn’t clear where McMahan worked in September 2004 when the state Department of Finance and Professional Regulation issued his provisional loan originator’s license, part of the state’s first required registration.
At the time, the department required no criminal background check for mortgage originators, or loan brokers, as they typically are called.
“Everybody got a provisional license who wanted one,” department spokeswoman Susan Hofer said.
Since June 2005, the department has required loan originators to undergo a fingerprint check conducted by state police or federal authorities. A criminal record does not necessarily disqualify a person, but regulators do have discretion to withhold a license if they deem an applicant unfit.
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Copyright (c) 2005, Chicago Tribune
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