Randall Penberthy, Jr, sentenced for bank fraud

12:47 PM, May 19, 2010   |    comments
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KSDK  -- A former St. Charles real estate broker was sentenced to 33 months in prison after he pled guilty in February to a bank fraud charge.

According to the U.S. Attorney's Office, 50-year-old Randall Penberthy, Jr, brokered real estate transactions in the St. Louis area and elsewhere.

According to court documents, between late 2006 and October 2007, Penberthy recruited investors to buy residential real estate directly from distressed property sellers whose homes were in danger of foreclosure. With Penberthy's assistance, investors would finance the purchases through bank loans. Penberthy would fraudulently place and record a second or third deed of trust on the property, typically in the name of First Choice or some other entity he controlled, in order to make it appear that a legitimate second or third mortgage had been placed against the property.

According to court documents, Bank loan funds were used to pay the sales price of the property as well as to pay off the fraudulent second or third mortgage. Funds used to pay off the fraudulent second or third mortgage were paid to entities controlled by Penberthy, including First Choice and Midwest. He then used a portion of those funds to make the down payment on the property being purchased. Penberthy fraudulently misrepresented the source of down payment funds on loan documents.

The U.S. Attorney's Office said Penberthy's scheme has caused financial institutions to lose in excess of $500,000. Restitution will be determined at a future date by the court.


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