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Mortgage fraud indictment includes luxury homes in Warren County

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By Denise G. Callahan, Staff Writer Updated 5:19 PM Friday, January 29, 2010

CINCINNATI — Two high-end home builders, a former banker and alleged scam artist Eric Duke all pleaded not guilty Fri., Jan. 29 to seven counts of loan and wire fraud.

An indictment was handed down by a federal grand jury Jan. 27 against Eric Duke, luxury home builder Bernie Kurlemann, Mason builder Bryan Sanneman and former Huntington National Bank vice president Terrence J. Monahan, Jr.

Duke, a tax preparer and interior designer, is charged with all seven counts. The others were charged in various counts of loan fraud, wire fraud and conspiracy. A federal judge released them on their own recognizance during the arraignment Friday.

All face decades in prison if found guilty.

Two “straw buyers,” Francisca Webster and Christopher Gagnon, are being charged separately for their part in the scheme to buy three homes in Long Cove in Deerfield Twp. and one home in River’s Bend in South Lebanon.

Webster, of Cincinnati, sued Duke in Hamilton County Common Pleas Court in 2006, claiming as her friend and tax advisor he tricked her into buying two Long Cove homes and one in River’s Bend.

She said Duke told her she could get out of debt if she loaned him her good credit by “buying” the houses, two of which had been Homearama show houses in Long Cove.

Webster agreed and signed all the necessary documents, although they falsely stated her financial position, according to the lawsuit.

The loan application stated her monthly income was in excess of $49,000 — her annual income at the time of the purchases in 2006 and 2007. Court records also include a document from Huntington National Bank that shows she had almost $2 million worth of investments.

She did not, according to the lawsuit.

Webster’s attorney at the time, Ron Parry, said Duke had been making the mortgage payments but stopped in 2008. He said Duke sold one of the houses, which wasn’t his to sell.

Webster’s civil case was eventually dismissed by the court. Gagnon bought a mansion on Emerald Isle. His loan application stated he earned $61,500 month and put down $280,000 in earnest money that was never actually paid to Kurlemann.

U.S. Attorney Carter Stewart said in one of the transactions, Kurlemann allegedly gave the down payment to Duke to give to the “straw purchaser,” who then gave it back to Kurlemann.

“If these buyers of these homes lied to their lenders to get mortgages, Bernie Kurlemann did not know that they lied,” Kurlemann said in a release.

Representatives from the Ohio and U.S. attorney general offices, the FBI and the Warren County Prosecutor’s Office announced the indictments Friday.

“We have been hit in about the last year and a half with mortgage fraud situations,” Warren County Prosecutor Rachel Hutzel said. “It does have an enormous impact on the community.”

Bruce McGary, Chief Assistant Prosecutor for Warren County and now a special assistant U.S. attorney, spent nearly two years working with state and federal agencies on this investigation.

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