3 charged in mortgage fraud case

LANSING, Mich. (WOOD) - Three men -- including one who prosecutors said has fled the country -- have been charged by the Michigan Attorney General with running a mortgage fraud scheme targeting West Michigan.

"This case is especially disturbing because they targeted people who did not understand the process, creating a financial disaster while pocketing thousands for themselves," Attorney General Mike Cox said in a statement.

Damon Clark of Grand Rapids, Reginald Tardy Jr. of Ferndale and Brian VanFarowe, the onetime Grand Rapids man who the attorney general said has left the United States, face charges of racketeering, conspiracy and obtaining money by false pretense.

Clark and Tardy were arraigned in Montcalm County District Court.

The fraud traces back to home sales in 2005, investigators said, after Clark convinced a Grand Rapids woman, Aracelis Tejada, to buy some rental properties. Clark called it a "business opportunity," according to an affidavit in the case.

But when Clark filled out the loan paperwork for the woman, he lied, according to investigators.

The affidavit states Clark lied about Tejada's employment , her income and her rental history -- and claimed each of six houses was the woman's primary residence.

The six properties in question, according to the attorney general, are spread throughout Grand Rapids: on Eastern Avenue SE, Fountain Street NE, Liberty Street SW, Henry Avenue SE, Lynch Street SW and Dickinson Street SE.

Despite an apparent language barrier, Tejada eventually noticed the false statements relating to employment and income.

"Clark responded that such misrepresentations were necessary in order for her to get the requested loan," the affidavit stated.

Tejada then signed the documents knowing they were false, according to the affdavit. She is cooperating with prosecutors and has been given "transactional immunity" in the case.

24 Hour News 8 attempted to speak with Tejada about the case Thursday but was unable to reach her.

Clark and Tardy obtained "generous" assessments for the homes, the attorney general charged. And after each sale, investigators said the two walked away with illegal kickbacks from the seller, which owned all six properties.

Who was giving the kickbacks? The affidavit charged it was VanFarowe's company, Advanced Realty Systems.

Target 8 investigated VanFarowe and the company back in 2005, the same year the sales in the attorney general's case occurred.

VanFarowe was telling homeowners in trouble he would help them. He would get them to sign their homes over to Advanced and he would then sell the homes back to the former owners on a land contract at an inflated price.

The homeowners often couldn't afford the contract payments and defaulted. VanFarowe would wind up with the property and sell it for another profit.