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Chris Schaller, a former mortgage broker jailed in June for fraud, had partners including two state employees, according to a 2018 court affidavit used to obtain a federal search warrant for the contents of Schaller’s cellphone.

Additionally, three appraisers Schaller relied on were sanctioned by the state’s Department of Financial and Professional Regulation.

The FBI began its investigation in 2014, according to the affidavit, after the bureau received information that Schaller had begun living a lavish lifestyle. Schaller, according to the affidavit, had purchased a Corvette, a Mercedes, houses and land.

The two state employees, including one who works for the Illinois State Police, were partners of Schaller, according to the affidavit prepared by FBI agent David Hood, who wrote that the three were suspected of engaging in illegal gambling operations using a bank account belonging to the two employees, who Illinois Time don’t name them because they haven’t been charged with crimes.

Mark Wykoff, attorney for the state police employee, said he had no comment. “I don’t know any of that,” the other state employee said when asked about the allegations in the search warrant application.

In 2017, investigators searched the trash of a Springfield home where one of the employees had stayed and found a ledger. “The ledger details a list of bets placed on professional and collegiate sporting events,” Hood wrote in the affidavit. “The pieces of paper indicate approximately $21,150 in bets over a three-day period.”

Over the course of 22 months between 2012 and 2014, nearly $352,000 passed through the joint bank account established by the two state employees, according to the affidavit. During this period, one of the employees deposited $53,300 in cash into the account in a series of nine deposits ranging from $9,000 to $300, according to Hood’s affidavit. “Evidence suggests that these large cash transactions may be associated with an illegal gambling operation,” Hood wrote.

The money from the two employees, according to Hood’s affidavit, could have been used to buy a house ten years ago. Within 30 minutes, the two state employees purchased $38,000 in cashier’s checks, with each of four checks, from four different banks, for $9,500, or $500 under of a $10,000 threshold at which financial institutions are required to report cash transactions to the government, Hood writes in his affidavit. Each check was made payable to Schaller, who purchased a cashier’s check for $6,559.98 four days later. That same day, a trust with Schaller as the sole beneficiary purchased a Riverton home for $44,559.98, the exact sum of the five cashier’s checks, according to the affidavit.

Fifteen months later, in 2013, a 22-year-old man who made $9 an hour bought the house for almost $87,000 through Schaller, who helped him with the paperwork. After closing, the securities company paid the sale proceeds, more than $86,000, to the Schaller-controlled trust. Five days later, Schaller transferred $38,105 from his bank account to the joint account held by state employees who had given Schaller’s cashier’s checks, according to Hood’s affidavit. Eighteen months later, the man who bought the house defaulted, and U.S. Bank, which bought the note from Diamond Residential Mortgage, Schaller’s employer at the time, was foreclosed. The deal was one of 10 cited by the Illinois Department of Financial and Professional Regulation as examples of wrongdoing by Schaller, who found he had falsified documents, and therefore fined him $128. $000 in 2018 and revoked his mortgage originator license.

In 2017, according to the affidavit, Schaller processed a home loan for the 91-year-old mother of one of the state employees. Shortly before the loan was granted, she allegedly signed an affidavit saying she wanted to move from Jacksonville to Springfield to be closer to her doctors, according to the affidavit and the 2018 IDFPR order revoking the license. of Schaller State. According to Hood’s affidavit, the down payment for the house purchased in his name came from the joint bank account controlled by the two state employees.

After the deal closed, the employee established a garbage service in his own name at the Springfield home while his mother continued to live in Jacksonville. FBI surveillance and trash recovered from the house established that the employee lived in the house with his children, according to Hood’s affidavit. When questioned by authorities, the employee’s mother said the affidavit with her signature indicating her desire to move to Springfield was fraudulent, according to the IDFPR order.

Schaller had many allies, according to a Diamond employee who spoke to the IDFPR and the FBI. The IDFPR disciplined three real estate appraisers after the employee told the department and the FBI that they were involved in efforts to establish appraisals that would help greenlight mortgages so Schaller could earn commissions. Evaluators include Nathaniel Radwine, whose state license was suspended indefinitely in 2019; Sean McKinney, who was reprimanded and fined $4,500 in 2020; and Lora L. Metcalf Crocker, whose license was revoked in 2020. She was also fined $7,000.

Between 2011 and 2016, Crocker appraised about 40 properties and set values ​​predetermined by Schaller, according to a 2020 consent order with the IDFPR, which says she sought additional compensation for doing so. Radwine discussed the valuations with Schaller and “may” have responded to requests to set specific values, according to an IDFPR consent order. McKinney, according to the IDFPR, accepted appraisal assignments that he should have rejected because they included inappropriate conditions.

The Diamond employee who named appraisers during his interview with the FBI and IDFPR said Schaller kept a brown folder containing letterhead from banks, hospitals, an inspection company of houses and other entities, with letterhead created by erasing the contents of legitimate letters so that fake ones could be created so that loans are approved. “Every time a legitimate letter came in, he added it to the file,” the employee told the FBI and IDFPR. When a credit score was low, Schaller used a self-storage company to falsely claim a borrower had a habit of paying rent on time, the employee said.

Illinois Time does not name the employee, who remains with Diamond Residential Mortgage, because he has not been charged with a crime or sanctioned by state regulators. He did not respond to an email or phone message seeking comment. The employee admitted to signing documents with customers’ names and posing as deceased people when calling banks to get refunds on mortgages if a transaction involved a deceased person. What started as harmless shortcuts to signing client names on routine documents has grown into something more, the employee said. One example was a request to change a foreclosure date on documents prepared by the sheriff’s department, he said. “I was like, man, this is crazy,” the employee said.

Schaller, the employee said, asked others to sign client names on documents and break the rules. “It would get to the point where he would ask for something strange,” the employee told federal authorities and the IDFPR. “It got to the point where, I don’t do this anymore, and he would move on to the next person. They would get to the point where they wouldn’t do this anymore, and he would move on to the next person.”

The employee had never worked in the mortgage industry before Schaller hired him.

“He said it was normal, that’s what you do,” the employee told the FBI and IDFPR. “He was very hungry and always encouraged others to be hungry too. … Unfortunately, a lot of us made very bad decisions.”

After Schaller was investigated, Diamond Residential Mortgage agreed to set up a $1.28 million fund to make consumers whole.

In a written statement, a spokesperson for Diamond Residential Mortgage said, “From the outset, the company has asked its employees to cooperate fully with federal and state authorities in their thorough investigation and the company has also cooperated in the prosecution. Mr. Schaller’s criminal prosecution benefited not only Diamond’s customers, but the company and its employees, and the company subsequently strengthened its processes and procedures in accordance with its consent order with the state of l ‘Illinois.

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