Published: May 17, 2008 02:26 pm         

Officer charged in mortgage loan scam

SOUTH BEND, Ind. — A veteran police officer has pleaded guilty to federal bank fraud charges for his role in an elaborate mortgage fraud scheme that bilked lenders out of hundreds of thousands of dollars.

Sgt. Robert Culp, who has served on the South Bend Police Department for 17 years, was relieved of duty with pay Friday after entering a guilty plea in federal court in South Bend.

Culp, 43, of New Carlisle, was involved in a scheme between 2003 and 2007 that bought dilapidated houses and sold them at two or three times their actual value, according to federal court documents.

Investigators said Culp sold more than 190 homes in the South Bend area.

But the sales ere made to “straw purchasers” — individuals recruited by Culp and accomplices to purchase the homes at the inflated price, according to Culp’s petition to plead guilty.

For agreeing to buy the home at a highly inflated price, the straw purchaser was told that he would receive 20 percent of the mortgage loan back, and that Culp and associates would cover the closing costs on the purchase.

In some cases, Culp also agreed to pay the first year’s mortgage or to find tenants for the property.

Culp, according to his plea, said that once a straw purchaser was found, he would work with two local loan agents to secure mortgages from Wells Fargo and other lenders.

The mortgages — usually made at 80 to 90 percent of the reported purchase price — would then be divided up among Culp, the local agents, Culp’s accomplices and the home’s purchaser, who usually received about 20 percent of the home’s sale price back.

For each home sold, Culp estimated that he made between $5,000 and $7,000.

Culp wrote that he and accomplices would also help pay the closing costs on the home, and would often inflate the purchaser’s assets on the mortgage application.

He could have faced up to 30 years in prison and a million dollar fine before the agreement.

But in his plea he agreed to pay full restitution and will continue to cooperate with federal prosecutors, including testifying in a grand jury investigation in exchange for a recommendation for a lesser sentence.