In November, acting U.S. Attorney Robert J. Troester announced updates in a pair of white-collar crime convictions in U.S. District Court for the Western District of Oklahoma.
On Friday, Nov. 19, a federal jury convicted three co-owners of the Big Red Dealerships on numerous counts of wire fraud, conspiracy, forgery and identity theft. Norman residents Bobby Chris Mayes, Charles Gooch and Courtney Wells now await sentencing.
On Monday, Nov. 29, former Oklahoma City mortgage company president Ronald J. McCord was sentenced to serve 104 months in federal prison for defrauding local banks, Fannie Mae and individual homeowners. He was also ordered to pay $51.9 million in restitution to victims.
Both cases dealt with fraudulent financial practices involving prominent Oklahomans or Oklahoma companies.
‘Materially false statements’ at Big Red car dealerships
If Big Red Sports and Imports and Big Red Kia sound familiar, you might be a University of Oklahoma football fan who remembers quarterback Rhett Bomar and offensive lineman J.D. Quinn being kicked off the team in 2006 because they accepted cash payments for bogus car dealership “jobs.” (According to OU’s official report on that matter, the NCAA and then-OU President David Boren were sent an anonymous email in March 2006 alleging Bomar and Quinn were being paid for work they did not do.)
More than a decade later, Bobby Chris Mayes, Charles Gooch and Courtney Wells — the co-owners of Big Red Sports/Imports, Big Red Kia, Norman Yamaha, Norman Mitsubishi and Mayes Kia — were caught documenting “fictitious cash down payments for lenders,” making “materially false statements and omissions to lenders” and “conspiring to commit wire fraud,” according to a press release from Troester’s office.
“At trial, the jury heard testimony that the Big Red Dealerships used advertisements to target potential customers with poor credit and that Mayes, Gooch, and Wells then fraudulently induced lenders to approve loans for such customers by documenting that the customers provided cash down payments and/or trade-in vehicles when that was untrue,” the release stated. “Twelve different Big Red Dealership customers testified about their experiences buying cars at the Big Red Dealerships, along with several former employees and representatives of several lenders.”
According to the U.S. attorney’s press release, the Big Red Dealerships referred to the fictitious down payments as “King Cash” in internal documents.
“The jury also heard testimony that in late 2014, one lender discovered these fake cash down payments, and Mayes emailed threats to the CEO of that lender in an effort to stop the lender from further investigating the Big Red Dealerships,” the release stated.
The release outlined the next iteration of fraudulent activity at the dealerships:
Evidence at trial also showed that from February 2015 until late 2017, the Big Red Dealerships continued to document fictitious cash down payments for lenders. During that time period, for at least 519 customers, the down payment was purportedly based on a pawned item provided to Norman Pawn & Gun, a pawn shop owned by Gooch and located in a building owned by Mayes, although it was never open for business and never had any employees.
After loan proceeds were received from lenders, Big Red Dealership employees generated checks to the customers, forged the customers’ signatures on the backs, deposited the checks in Big Red Dealership accounts, and fully reimbursed Norman Pawn & Gun for the purported down payments. The jury also heard that the Big Red Dealerships falsely documented vehicle trade-ins for lenders to approve loans. On at least 542 occasions, the vehicle was never provided to the Big Red Dealerships and a separate transaction was documented—unbeknownst to the lender—in which the trade-in vehicle was resold to the customer for a dollar.
Finally, the jury heard testimony that at least one lender approved questionable loans—for up to two to three times’ the value of vehicles being purchased—after a Big Red Dealership manager gave cash bribes to a loan officer and the Big Red Dealerships provided fake invoices to justify the inflated prices.
Sentencing for Mayes, Gooch and Wells is expected within 90 days. The FBI’s Oklahoma City Field Office led the Big Red investigation. Federal investigators have long examined the lending and sales practices at car dealerships around the country.
First Mortgage Company failed to repay banks after payoffs
Facing a 24-count indictment from a federal grand jury in June 2020, Ronald J. McCord decided not to defend himself at trial. Instead, the disgraced founder of First Mortgage Company pleaded guilty in May to five counts that involved defrauding SpiritBank, Citizens State Bank and their residential-mortgage subsidiaries.
“An independent audit discovered that McCord had sold more than [$14.1 million] in Spirit/Mortgage Corp. and Citizens/Funding Corp. loans ‘out of trust’ by failing to repay Spirit/Mortgage Corp. when certain Spirit/Mortgage Corp.-initiated loans were refinanced or otherwise paid off,” the U.S. attorney’s press release stated. “At the time of this discovery, FMC carried outstanding balances of about [$200 million] and [$140 million] on the Spirit/Mortgage Corp. and Citizens/Funding Corp. lines of credit, respectively.”
The two companies terminated new lending arrangements with McCord and instituted new requirements on existing mortgages, but federal prosecutors said McCord still collected mortgage payoffs himself on two properties. Prosecutors also said that McCord admitted to making a materially false statement in 2017 while trying to sell First Mortgage Company’s lending business to a North Carolina company.
In 2017, McCord’s company serviced about 12,000 loans, worth a total of $1.8 billion, for the Federal National Mortgage Association, commonly known as Fannie Mae.
“McCord admitted at his plea hearing that he defrauded Fannie Mae by diverting escrow monies intended to pay homeowners’ taxes and insurance premiums to cover FMC’s operating expenses,” the U.S. attorney’s press release stated. “McCord also admitted that he then laundered the proceeds by causing a wire transfer from FMC’s operating account to a custom home builder, as payment towards construction of McCord’s vacation home in Colorado.”
In total, Judge Robin J. Cauthron determined that McCord had caused the loss of more than $95 million to local and national financial institutions and to local borrowers. McCord is scheduled to self-surrender to the Federal Bureau of Prisons on Jan. 6 for his 104-month sentence, which equates to more than eight and a half years. Following that, the 71-year-old McCord would be on probation for three years.
Biden selection for U.S. attorney pending
Robert “Bob” Troester is in his fourth stint as acting U.S. attorney, most recently stepping into the role for the Western District of Oklahoma office in March, following the departure of Tim Downing, who joined Oklahoma Attorney General’s Office. (Downing had previously worked in the AG’s office from 2011 to 2016 before serving one term in the Oklahoma House of Representatives.)
It’s unclear when President Joe Biden will announce his selection of a new U.S. attorney for Oklahoma’s Western District Court, but the nominee would need to receive confirmation from the U.S. Senate for a four-year term.