The Mortgage Trap
How a small-time crook took advantage of the housing boom and defrauded Dallas home buyers out of millions.
The name Charles Cooper Burgess was developing a familiar ring in the FBI’s fortress-like offices in northwest Dallas in the spring of 2004. The con man had popped up on enough FD-71s, the bureau’s complaint forms, that he was about to pass Supervisory Special Agent Kellee Casebeer’s litmus test for assigning agents in her white-collar crime unit. “When I’ve heard a name often enough that I don’t need to look it up, chances are we’re going to open a case,” she said.
Casebeer picked Special Agent Garrett Zito, a neatly pressed second-year agent with an accounting background, to look into Burgess’ multiple schemes. Foremost was a mortgage fraud ring that was helping make Dallas one of the nation’s top hot spots for the crime.
Over the following months, Zito and an agent from the Federal Deposit Insurance Corporation assembled a paper trail out of subpoenaed bank records and real estate documents, plus the sworn statements of people whom Burgess had recruited as buyers of 40 homes in neighborhoods from Frisco to DeSoto to Lovers Lane in Dallas. Burgess, whose slow march to justice took four more years, proved to be worthy of the feds’ attention. He led a conspiracy that defrauded lenders—average people promised easy money by flipping their investment property—out of more than $1.7 million. “I’m a very good talker,” the 52-year-old Burgess said later. “I’ve persuaded people to do things that were wrong.”
Wrong because Burgess’ tender trap turned them into lawbreakers when they signed mortgage applications that inflated their assets or claimed on bank papers that they were buying a house to live in when they knew that was untrue.
It was a simple scam, really, because Burgess, like other mortgage fraudsters, played into the zeitgeist of the late, great housing boom, where everyone thought about profit and few considered loss. He used others’ greed to tap the keg of easy home loan money that eventually turned everyone at the real estate party a little tipsy—and brought on the hangover the country is enduring now.
As Zito made his way through his interviews with the scammed home buyers, he was struck that some initially refused to cooperate, even though it was beginning to dawn on them they had been had. “They told me if Burgess went to prison, they’d never get paid,” Zito says. “I’d tell them, ‘It doesn’t matter what happens to him. The money is gone.’ ”
When he was making an honest living, Chuck Burgess worked at sales jobs selling bottled water or wholesale light fixtures and ceiling fans. The son of a well-off owner of a Chicago paper-making company, his tastes ran to beach-front condos in Florida and new cars.
To float his lifestyle, he borrowed heavily from his mother, according to Janet Burgess, one of two ex-wives. But increasingly over the past decade, as evidenced by civil judgments against him, hot-check charges, and two bankruptcy filings, he filled the chasm between his income and his wants with small-time scams.
Burgess graduated to the more elaborate business of mortgage fraud in 2001, when he and Mark Manners, who was skilled with computers, agreed over breakfast at a North Dallas Waffle House to form Better Homes of Dallas. They set up shop in an office park on Davenport Road and began lining up houses for their investors to buy.
To sellers, Burgess described himself as a relocation company whose clients could pay more than the asking price. The home seller, warmed up by the prospect of a sale above the listing price, agreed in return to let him take a sizable “relo” commission at closing. “Builders knew we were raising prices so they assisted us,” Burgess later explained under oath. “We told them enough so they would work with us.”
For his investors, the deal Burgess proposed sounded simple and practically harmless. Burgess’ investors bought houses with no money down, and he paid a few of them a $10,000 fee for their efforts, as promised. But their properties—many of them new homes sold by builders in Plano, Allen, Frisco, and McKinney—were vastly overvalued for the initial purchase by appraisers working with Burgess. The inflated prices, and the big loans they supported, gave the ring money to steal at the closing table, in amounts running from $20,000 to $120,000 a pop. When Burgess’ promises to pay the mortgage or resell the house proved to be lies, his marks were left holding $350,000 or $500,000 mortgages on properties worth much less.
One such person was Jerry Yancey, who audits telephone installations and lives in Burleson. A former co-worker at the telephone company who invested with Burgess introduced him to Yancey in February 2003. After two meetings, Yancey said, Burgess’ no-money-down deal “sounded good, so I decided to jump in the boat.” He was soon the owner of a new 3,750-square-foot 4-bedroom, 4-bath red brick home in the 4100 block of Hearthlight Court in Plano, and a $400,000 home loan.
At the closing, Andrew Siebert, who worked at a title company and worked with Burgess, pulled $80,000 out of the escrow account, noted it on the closing statement as a lien against the property, and sent it to Burgess in a cashier’s check. Half of that money Burgess sent straight back as the cash down payment for the house, leaving him about $40,000 profit from the scam.
Yancey testified at Siebert’s and Manners’ fraud trial that he knew Burgess’ group had inflated his assets on loan applications. He fessed up to signing a host of misrepresentations at the closing, too. “Greed, I guess, got ahold of me,” Yancey says, explaining the legal and ethical lapse. The following year, the Plano house went into foreclosure. His finances and credit lay in ruins—which still wasn’t the worst fate that befell a Burgess victim.
By early 2005, Zito had enough on Burgess to call him into his office for an interview. The agent handed him a target letter informing him a grand jury was investigating him. Burgess declined to cooperate, but the realization that he was in the feds’ crosshairs soon had him pushing panic buttons. He even tried to bribe Zito $80,000 to end the investigation.
Later that year, Burgess was indicted on a host of federal fraud and conspiracy charges.
Burgess presented an image of a contrite and broken man when, in meeting with federal prosecutors in downtown Dallas, he agreed to plead guilty to fraud charges and testify against his fellow conspirators. Unlike most cases, where underlings turn against higher-ups, Burgess was the ringleader, the guy who, in his words, “filled the big top.” Still, the government valued his help in the December 2006 trial of Siebert and Manners, both of whom were found guilty of fraud charges by a federal jury.
In 18 meetings with prosecutors, Burgess detailed not only his group’s activities, he volunteered stories of Russian mobsters, money launderers, and drug-dealing Dallas restaurateurs. No telling how truthful those leads proved to be, but it was left to someone other than Zito to sort them out. Before Manners’ and Siebert’s trial, he was transferred to the terrorism unit.
Given Burgess’ penchant for lying, most of his leads were likely tall tales. He romanticized The Sopranos, according to his ex-wife, and one of his sidekicks in the mortgage scams frequently introduced himself as Anthony Gambino, of the real-life New York crime family. The ruse scared off at least a few of the investor/home buyers who called wondering why banks were sending them notices that their mortgages were in arrears.
What Burgess was not revealing to authorities were the scams he was continuing to pull even after he agreed to come clean.
In February 2006, according to testimony, he stole a man’s identity and used it to rent a townhouse for himself and a woman who later that year became his third wife. He suckered another into giving him $9,000 that he said he needed to buy an option on a piece of property on Haskell Avenue in Dallas. A third victim he paid $3,000 for use of his credit to buy a car. The swindle yielded Burgess a new Chevy Tahoe, which after six months was repossessed.
Before prosecutors succeeded at revoking his bond that July, he geared up his mortgage fraud one last time. Identifying himself as Brian Hernandez, he first persuaded 60-year-old Judy Miarka of Aurora, Colorado, to let him hold $60,000 of her modest savings as “reserves” to back up a real estate deal, for which in turn she was promised a $12,000 fee.
While she was awaiting the return of her money, Miarka agreed to buy a $566,000 4-bedroom house in Palm Beach County, Florida, which Burgess was supposed to pay for and then sell. After she realized she had been taken in the mortgage fraud, a property manager found paperwork and personal effects showing Burgess and his fiancée had been living there.
A year later, unable to absorb the misery of it all, Miarka put a gun to her head and committed suicide.
The death haunted Burgess’ sentencing this March, although it was not part of any official charge. “In my heart I know it’s your fault,” U.S. District Judge Barbara Lynn told Burgess. “You didn’t have a gun, but you’re responsible for her being dead.”
Burgess told the judge he was remorseful. He said he had found God. But Lynn had heard enough. “You’re a slick talker,” the judge said. “You look people in the eye and give them the same baloney you just gave me.” Setting his sentence at the maximum, 22 years, Lynn said she would lose sleep if she subjected the world to him any longer. “If you never get out,” the judge said. “I don’t care.”
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