IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

UNITED STATES OF AMERICA

v.

JOHN J. MCELROY

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CRIMINAL NO. 11-

DATE FILED:

VIOLATIONS:

18 U.S.C. § 1343 (wire fraud - 17 counts)

18 U.S.C. § 1014 (false statements to obtain

18 U.S.C. § 1956 (money laundering - 11

18 U.S.C. § 1957 (monetary transactions

COUNTS ONE AND TWO

THE GRAND JURY CHARGES THAT:

1. First Magnus Financial Corporation was a mortgage lending business

located in Tucson, Arizona.

THE SCHEME

2. From on or about April 13, 2007 to on or about April 27, 2007, in the

Eastern District of Pennsylvania and elsewhere, defendant

devised and intended to devise a scheme to defraud First Magnus Financial Corporation, and to

obtain money and property by means of false and fraudulent pretenses, representations and

$330,750, and for a second mortgage loan of approximately $41,400.

5. To induce the lender to issue the loans, defendant JOHN J. MCELROY

falsified his liabilities on the loan applications by reporting that the existing mortgage on his real

property at 959 Patricia Lane in Kennett Square, Pennsylvania was $203,876, when in fact the

defendant refinanced that loan on or about March 30, 2007 with a new mortgage of $391,500.

6. Additionally, defendant, JOHN J. MCELROY falsified the applications by

stating that he was purchasing the real property as owner occupied. To secure the loans from

First Magnus Financial Corporation, defendant JOHN J. MCELROY signed an Owner Occupied

Agreement. The Owner Occupied Agreement states that the borrower would occupy the real

property within sixty days of the security instruments being recorded, and the borrower would

lender to the title company, American Freedom Assurance, Incorporated, in furtherance of the

caused to be transmitted by means of wire communication in interstate commerce the signals and

sounds described below for each count, each transmission constituting a separate count:

York City, New York, account no. xxxxxxxx3sci, at UBSAG, New

York, New York, (routing no. 026007993), to American Freedom

Assurance Incorporated, Berwyn, Pennsylvania, account no.

xxxxxx1605 at PNC Bank, NA, Philadelphia, Pennsylvania (routing no.

031000053).

COUNT THREE

THE GRAND JURY FURTHER CHARGES THAT:

Eastern District of Pennsylvania, and elsewhere, defendant

devised and intended to devise a scheme to defraud Countrywide Bank FSB, and to obtain money

and property by means of false and fraudulent pretenses, representations and promises.

It was part of the scheme that:

3. Defendant JOHN J. MCELROY entered into an agreement to purchase the

real property located at 2312 S. Mellonville Avenue, Sanford, Florida 32771.

4. To purchase the property, defendant JOHN J. MCELROY, who resided in

the Eastern District of Pennsylvania, made application through First Metropolitan Mortgage

False Statements

a On the loan application, he under reported his liabilities by reporting that the

existing mortgage on the property at 959 Patricia Lane, Kennett Square,

Pennsylvania was $102,434, when in reality, the defendant had refinanced the

mortgage on that property just two months earlier, on or about March 30, 2007,

and had an existing mortgage of $391,500.

b On the loan application, he failed to disclose that just one month earlier, on April

d At settlement, he fraudulently represented, and aided and abetted the false

representation, to Countrywide Bank FSB that a total of $121,000 was being

issued to satisfy a second mortgage owed by the sellers, when in reality the

$121,000 “second mortgage” payment was issued to JC Consultants, a business

owned by the defendant, which the defendant concealed from Countrywide Bank

FSB. Although payment was issued to JC Consultants, defendant JOHN J.

MCELROY deposited the $121,000 in funds in his own personal bank account.

e On the loan application and settlement sheet, defendant JOHN J. MCELROY

fraudulently represented, and aided and abetted the false representation, to

Countrywide Bank FSB that he would come to and present at settlement between

settlement as outlined above, Countrywide Bank FSB approved the loan to defendant JOHN J.

MCELROY. The funds were transferred from the lenders to the title company, WCTC Title and

Escrow Services, in furtherance of the defendant purchasing 2312 S. Mellonville Avenue,

Sanford, Florida, and the lender then disbursed a mortgage broker fee to First Metropolitan

for the purpose of executing the scheme described above, and aiding and abetting its execution,

caused to be transmitted by means of wire communication in interstate commerce the signals and

sounds described below:

DESCRIPTION

$543,411.30 wired from Countrywide Bank FSB, account no. xxxxxx4639 at The Bank of

New York, New York, New York (routing no. 021000018), to WCTC Title & Escrow

Services, LLC account no. xxxxxxxx-4558 at Bank of America, NA, Tampa, Florida (routing

no. 026009593).

In violation of Title 18, United States Code, Sections 1343 and 2.

COUNT FOUR

THE GRAND JURY FURTHER CHARGES THAT:

THE SCHEME

Eastern District of Pennsylvania, and elsewhere, defendant

devised and intended to devise a scheme to defraud Bayview Loan Servicing, and to obtain

money and property by means of false and fraudulent pretenses, representations and promises.

It was part of the scheme that:

3. Defendant JOHN J. MCELROY entered into an agreement to purchase the

real property located at 2310 Garrett Road, Upper Darby, Pennsylvania 19082.

4. To purchase the property, defendant JOHN J. MCELROY made

application to Bayview Loan Servicing for a mortgage loan of approximately $459,000.

False Statement on Loan Application

a Failed to disclose that he owned the residence at 15-1707-17 Maxatawny & Lehigh

b Failed to disclose that on or about April 27, 2007, the defendant purchased 143

False Statement on Loan Application

e Listed the length of the defendant’s employment at 1 Metropolitan Mortgage as ten

f Listed the property would be owner occupied and furnished a signed statement, dated

6. On or about July 31, 2007, defendant JOHN J. MCELROY further

falsified the statements on the settlement sheet, and aided and abetted the falsified statements on

the settlement sheet, in the following ways:

8. On or about July 31, 2007, in the Eastern District of Pennsylvania, and

elsewhere, defendant

for the purpose of executing the scheme described above, and aiding and abetting its execution,

caused to be transmitted by means of wire communication in interstate commerce the signals and

sounds described below:

following ways:

a Failed to disclose that on or about April 27, 2007, the defendant purchased 143

b Failed to disclose that on or about June 13, 2007, the defendant purchased 2312 S.

c Failed to disclose that on or about July 31, 2007, the defendant purchased 2310 Garrett

d Falsely listed as an asset $205,000 in an account with Morgan Stanley/Dean Witter,

DESCRIPTION

$113,958.59 wired from Trident Mortgage Company, Devon, PA from account no. xxxx4678

at Chase Manhattan Bank, NY, NY (bank routing # 021000021) to American Freedom

Assurance Inc., Berwyn, PA, account no. xxxxxx1605 at PNC Bank, NA, Philadelphia, PA

(bank routing # 031000053).

COUNT NINE

THE GRAND JURY FURTHER CHARGES THAT:

THE SCHEME

and elsewhere, defendant

devised and intended to devise a scheme to defraud Trident Mortgage, and to obtain money and

property by means of false and fraudulent pretenses, representations and promises.

It was part of the scheme that:

3. Defendant JOHN J. MCELROY entered into an agreement to refinance the

real property located at 23 Field Stone Drive, Cochranville, Pennsylvania 19330.

4. To refinance the property, on or about October 4, 2007, and October 23,

2007, defendant JOHN J. MCELROY made application to Trident Mortgage for a first mortgage

In violation of Title 18, United States Code, Sections 1343 and 2.

COUNTS TEN THROUGH FOURTEEN

THE GRAND JURY FURTHER CHARGES THAT:

THE SCHEME

and elsewhere, defendant

devised and intended to devise a scheme to defraud Trident Mortgage, and to obtain money and

property by means of false and fraudulent pretenses, representations and promises.

It was part of the scheme that:

3. Defendant JOHN J. MCELROY entered into an agreement with straw

purchaser N.W. to sell the real property located at 2312 S. Mellonville Avenue, Sanford, Florida

32771.

4. To assist the purported buyer in purchasing the property, and so that the

social security number for a person other than the applicant.

residing there.

and paying rent to a property management company when, in

fact, the property was owned by the buyer’s parents and the

buyer was not paying rent to any property management

company.

Represented that the applicant/buyer provided $53,525.05 at

the closing, when in reality the funds were paid by the seller,

defendant JOHN J. MCELROY.

to cover the closing cost that straw purchaser N.W. was required to present at settlement.

8. Based on the falsified applications and supporting documentation supplied

by defendant JOHN J. MCELROY, the loan was approved by the lender and the sale of the

property approved. On or about November 6, 2007, Citizens Title Online Inc. wired $567,534.75

MCELROY then wired that exact amount, $42,882.73, from his bank in the Eastern District of

Pennsylvania to G.F., a person known to the grand jury, who aided and abetted straw purchaser

N.W. and defendant MCELROY in the fraudulent sale of the property.

10. On or about the dates listed below, in the Eastern District of Pennsylvania,

and elsewhere, defendant

for the purpose of executing the scheme described above, and aiding and abetting its execution,

caused to be transmitted by means of wire communication in interstate commerce the signals and

sounds described below:

$42,882.73 from account no. xxxx4052 at Florida Capital Bank, NA, Jacksonville,

THE GRAND JURY FURTHER CHARGES THAT:

2. On or about November 20, 2007, in the Eastern District of Pennsylvania,

defendant

knowingly made and caused to be made to Police and Fire Federal Credit Union a false statement

for the purpose of influencing the actions of Police and Fire Federal Credit Union upon a loan,

that is a $157,500 mortgage loan on the property at 15-1707-17 Maxatawny & Lehigh Drive,

Pocono Lake, Pennsylvania 18347, in that defendant JOHN J. MCELROY knew the statements

listed below were false:

b Failed to disclose that on or about July 31, 2007, the defendant purchased 2310 Garrett

All in violation of Title 18, United States Code, Sections 1014 and 2.

COUNT SIXTEEN

THE GRAND JURY FURTHER CHARGES THAT:

THE SCHEME

2. On or about December 4, 2007, in the Eastern District of Pennsylvania,

and elsewhere, defendant

devised and intended to devise a scheme to defraud Trident Mortgage, and to obtain money and

property by means of false and fraudulent pretenses, representations and promises.

It was part of the scheme that:

3. Defendant JOHN J. MCELROY entered into an agreement to purchase the

real property located at 724 Concord Road, Glen Mills, Pennsylvania 19342.

4. To purchase the property, on or about December 4, 2007, defendant JOHN

a On the mortgage application, failed to disclose that on or about November 2, 2007, the

d On the mortgage application, provided false residence information, and a fake

e Stated in a written response to inquiry from IndyMac Bank that the Mellonville property

sounds described below:

$482,743.82 wired from IndyMac Bank FSB, Pasadena, CA from account no. xxxxxxxxx2000

(bank routing #322270288) to Nations Title Insurance Agency LLC’s account no.

xxxxxxxxx8056 at Wachovia Bank, NA, Jacksonville, FL (bank routing #063000021).

In violation of Title 18, United States Code, Sections 1343 and 2.

THE GRAND JURY FURTHER CHARGES THAT:

2. On or about February 24, 2008 through on or about September 4, 2008, in

the Eastern District of Pennsylvania, the Western District of Pennsylvania, and elsewhere,

defendant

knowingly made and caused to be made to Northwest Savings Bank a false statement for the

purpose of influencing the actions of Northwest Savings Bank upon loans that totaled $144,900

in first and second mortgage loans on the property at 25168 State Street, Meadville, Pennsylvania

16336, in that defendant JOHN J. MCELROY knew the statements listed below were false:

a

b

c

All in violation of Title 18, United States Code, Sections 1014 and 2.

THE GRAND JURY FURTHER CHARGES THAT:

2. Between on or about July 7, 2008 and on or about September 9, 2008, in

the Eastern District of Pennsylvania, the Western District of Pennsylvania, and elsewhere,

defendant

devised and intended to devise a scheme to defraud Amtrust Bank, and to obtain money and

property by means of false and fraudulent pretenses, representations and promises.

It was part of the scheme that:

3. Defendant JOHN J. MCELROY entered into an agreement to purchase the

real property located at 15188 Mill Street, Meadville, PA 16336.

False Statements

a Failed to disclose that on or about July 31, 2007, the defendant purchased 2310 Garrett

6. Based on the falsified applications, Amtrust Bank approved the mortgage

caused to be transmitted by means of wire communication in interstate commerce the signals and

sounds described below:

DESCRIPTION

$39,071.63 wired from Amtrust Bank, 1801 East Ninth Street, Cleveland, OH 44114 from

account no. xxxxx0433 to TT Esquire’s account no. 004357075 at 1098 Market Street,

Meadville, PA at National City Bank of Pennsylvania, Pittsburgh, PA (bank routing

#04300122).

COUNTS TWENTY-ONE THROUGH THIRTY-ONE

THE GRAND JURY FURTHER CHARGES THAT:

At all times material to this indictment:

1. In or about December 2006 through in or about September 2008,

defendant JOHN J. MCELROY was, at times, employed as a mortgage broker.

2. In addition to his lawful employment, defendant JOHN J. MCELROY was

also engaged personally in the purchase and sale of various real estate properties in the Eastern

District of Pennsylvania and elsewhere.

defendant JOHN J. MCELROY established JC Consultants, a sole proprietorship. This business

was not a legitimate business, but was used solely to assist in obtaining funds from fraudulent

without revealing himself as the true recipient of the funds.

4. On or about June 26, 2007, the defendant opened a business bank account

in the name of JC Consultants at the Police and Fire Federal Credit Union in Philadelphia,

Pennsylvania.

COUNT DATE DESCRIPTION

Escrow Services made payable to JC Consultants

in connection with real estate transaction at 2312

S. Mellonville Avenue, Sanford, FL.

to MCELROY’s personal account at Police and

Fire Federal Credit Union (“PFFCU”).

23 9/25/07 Transfer of $10,000 from JC Consultants account

to MCELROY’s personal account at PFFCU.

24 10/11/07 Transfer of $15,000 from JC Consultants account

to MCELROY’s personal account at PFFCU.

25 11/2/07 Transfer of $30,000 from JC Consultants account

to MCELROY’s personal account at PFFCU.

2312 S. Mellonville Avenue, Sanford, FL.

G.F., a person known to the grand jury, at the

Freedom Assurance made payable to JC

Consultants in connection with fraudulent

purchase of 724 Concord Road, Glen Mills, PA.

COUNT DATE DESCRIPTION

30 12/22/07 Transfer of $70,000 from JC Consultant account

to MCELROY’s personal account at PFFCU.

personal account at PFFCU, in connection with

7. The financial transactions described in Paragraph Five above involved the

and making false statements on loan applications, in violation of 18 U.S.C. § 1014, and

defendant JOHN J. MCELROY acted with the intent to promote the carrying on of specified

unlawful activity, and with the knowledge that the transactions were designed, in whole and in

part, to conceal and disguise the nature, location, source, ownership and control of the proceeds

of the specified unlawful activity.

and 2.

COUNTS THIRTY-TWO THROUGH FORTY-ONE

defendant JOHN J. MCELROY established JC Consultants, a sole proprietorship. This business

was not a legitimate business, but was used solely to assist in obtaining funds from fraudulent

loan applications on the real estate properties and to funnel the proceeds from the defendant’s

fraudulently obtained loans without revealing himself as the true recipient of the funds.

3. On or about the dates set forth below, each instance constituting a separate

count, in the Eastern District of Pennsylvania, and elsewhere, defendant

knowingly engaged in, and aided, abetted, and willfully caused, a monetary transaction affecting

interstate commerce in criminally derived property of a value greater than $10,000, described

more fully below, and such property was derived from a specified unlawful activity, that is wire

made payable to JC Consultants in connection with real estate

transaction at 2312 S. Mellonville Avenue, Sanford, FL.

personal account at Police and Fire Federal Credit Union (“PFFCU”).