Lawyer sentenced to six years in mortgage fraud

A former Charlotte real estate closing attorney was sentenced to more than six years in prison on April 15 following her conviction on mortgage fraud charges. She had faced a sentence of up to 25 years.

In April 2009, Victoria Sprouse was convicted by a federal jury on 18 charges of money laundering, mortgage fraud conspiracy and bank fraud. Sprouse and five co-conspirators participated in a number of schemes involving more than $20 million in mortgage loans and hundreds of Charlotte area houses, court documents show.

The indictment says that Sprouse participated in three separate mortgage fraud schemes where houses were purchased using fraudulent loan applications and other documents.

Sprouse and mortgage broker Michael Pahutski were initially charged in a scheme involving real estate investor Stephen Hawfield. The co-defendants helped Hawfield obtain more than $15 million from nBank, using fraudulent loan applications, to acquire 210 houses which Hawfield was flipping, the indictment reads.

During the course of the investigation, investigators uncovered more legal work performed by Sprouse in additional mortgage fraud schemes and filed a superseding indictment in March 2008. According to the evidence presented at trial, in 2000 and 2001, Sprouse, a local real estate investor and several builders participated in a scheme where builders would supply “decorator allowances” to investors. Investors would use the allowances to fund down payments on houses. Sprouse did not deposit the investor down payment into her law firm’s trust account until after the “decorator disbursements” had been deposited into an investor’s checking account, court documents show.

From 2002 through 2004, Sprouse and co-defendants including two Realtors, a mortgage broker and a local homebuilder engaged in yet another scheme in which mortgage loan applications were falsified. The mortgage broker would submit paperwork on behalf of investors stating that the property they were acquiring was their primary residence, even as the investors were buying multiple properties.

The builder allegedly would kick back a portion of the purchase price to the buyer through money funneled by the real estate agents, according to court documents. Sprouse did the legal work on these closings.

Following the jury verdict, Sprouse was released on $100,000 bond. Her co-defendants have all pleaded guilty. Pahutski, the mortgage broker, was sentenced to 19 years in prison in 2011.

Emails seeking comment from Peter Anderson, an attorney with Beveridge & Diamond who represented Sprouse, were not immediately returned.