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The last remaining defendant has pleaded guilty to federal charges of running a mortgage fraud scheme that artificially inflated the value of high-end homes in the Riverbottoms area of Provo.
Ron Clarke, a Realtor, pleaded guilty Thursday evening to one count of conspiracy to commit mail fraud. According to his plea agreement, Clarke's role in the scheme involved falsifying Multiple Listing Service data to inflate the value of homes in the Riverbottoms area. He stated in the plea agreement that he made the changes to the MLS at the request of Brad Kitchen, another defendant in the case, who owned an investor group called Home Owners Group.
Clarke's trial was set to begin on Aug. 25. He faces a maximum penalty of 20 years in federal prison.
Other defendants in the case -- Steven Wells Cloward, Kitchen, David Bolick and Jeffery David Garrett -- had already pleaded guilty to various charges in the case. Each of them faces a maximum penalty of 20 years in federal prison and a fine of $250,000.
The U.S. Attorney's Office dropped charges against another defendant in the case, Rebecca Ann Hadlock, because of a lack of evidence.
According to Clarke's plea agreement, in October 2005 he entered a real estate transaction into the MLS that was $160,000 more than the actual sales price, and that listed a false date for the closed sale. Then in January 2006, he falsified MLS data, this time inflating the list price of a home by more than $1 million. Also in January, and in March, Clarke said he entered into the MLS sales that he knew were more than $1 million more than the fair market value of the homes.
Clarke stated in the agreement that he falsified MLS data to add comparables in the Riverbottoms area to help him sell neighboring real estate at higher prices. A comparable is a completed sale that is used to establish fair market value for neighboring properties.
Clarke stopped working with Kitchen when he later contacted him and asked him to enter four sales into the MLS at $4 million each, according to the plea agreement.
Even though the mortgage scheme targeted between 20 and 30 homes in the Riverbottoms area, ultimately it affected the valuations of 550 homes because the scheme artificially inflated all home prices in the area, according to the Utah County Assessor's office.
Of the 550 affected homes, 460 had to have their property valuations adjusted in November 2007. That took place after 200 residents in the Riverbottoms area appealed their property tax valuations, which skyrocketed between 50 percent and 100 percent in just one year. The property valuations of most homes in other parts of Provo were up only 20 percent by comparison, said Utah County Assessor Kris Poulson. |
