HONOLULU (HawaiiNewsNow) - Two Hawai'i women accused of making millions in an elaborate real estate scam appeared in federal court Wednesday afternoon to face dozens of felony charges.
Officials say this isn't the first time they've encountered a debt elimination scheme to defraud mortgage lenders and escrow companies, but they say it's one of the most sophisticated they've investigated in Hawai'i.
46-year-old Jennifer Ann McTigue and 38-year-old Sakara Blackwell (aka Dawn Sakaguchi) were both taken into custody Wednesday morning on Oahu. A third person, 43-year-old Marc Melton, was arrested by the FBI in Sacramento, California.
The trio has been indicted on 45 counts – including mail fraud, wire fraud and money laundering. Officials say they sought out properties with overdue homeowners' fees and purchased them for as low as $17,000 at foreclosure auctions.
"They were going after properties that had way too much debt on them for the current market value," said Mark James, past president of the Mortgage Bankers Association of Hawaii. "So they were coming in to say, 'We're here to help you.' So-called 'help.'"
The majority of the properties they acquired still owed hundreds of thousands of dollars to mortgage lenders, but they're accused of falsifying mortgage payment agreements and filing the bogus paperwork with the state's Bureau of Conveyances. The public record would then officially reflect the properties as mortgage-free, when in fact they were not.
"We have one state Bureau of Conveyances, which is very unusual," said James. "Almost every part of the country and county bureau of conveyances. So the documents aren't necessarily look at as carefully as they should be."
According to the indictment, McTigue, Melton and Blackwell fraudulently obtained the releases of over $4.5 million in mortgages or other financial liens against those properties. McTigue and Blackwell are accused of then selling the properties and splitting the proceeds with Melton – making over $3.3 million in the process.
"These schemes are varied and take multiple forms," said Bruce Kim, executive director of the state Office of Consumer Protection. "And these sometimes are very sophisticated individuals who are perpetrating these schemes against homeowners who are having some hard times financially."
According to the indictment, McTigue, Blackwell and Melton have been running their scheme since February 2011. Blackwell is a real estate broker and McTigue presents herself as a financial strategist and real estate investor, according to her website. It's unclear what Melton, who is reportedly from Iowa, does. Officials say they purchased and sold properties in Honolulu and Waikiki, along with Waikoloa and Kailua-Kona on Hawai'i Island.
Both McTigue and Blackwell plead not guilty before United States Magistrate Judge Barry Kurren. A tentative trial date has been set for March 11, 2014 before Senior United States District Judge Helen Gillmor.
The defendants are charged with 27 counts of mail or wire fraud, each of which carries a maximum penalty of 30 years in prison and a fine of $1,000,000. They're also facing several charges of money laundering, which if convicted is a maximum ten year penalty per count and a fine of $250,000. The indictment also seeks forfeiture of property acquired from proceeds of the mail and wire fraud, along with property involved in the money laundering charges.
McTigue was released Wednesday on a $50,000 signature bond, while Blackwell was released on a $25,000 unsecured bond. Neither is allowed to communicate with fellow defendants nor leave the state, and all real estate activity related to their employment must be approved by pre-trial services.
Melton is expected to appear in court in California some time Thursday.
"The whole process of a release of mortgage is a very detailed process, and it's amazing they could fool such big institutions, on the mainland and in Hawaii," said James.
"This is very sophisticated white-collar crime."