Mike Wilkinson, Detroit News

Ronnie Duke was a disheveled, five-time felon who loved fast cars and found the perfect scam to fund his lifestyle: mortgages.

Federal prosecutors allege he and his team — which included at least one former stripper — ripped off mortgage companies of at least $100 million, turning nearly 200 Metro Detroit homes into cash machines to buy luxury cars, vacations, a night club and even a helicopter.

Nearly five years after the FBI began investigating, Duke and his associates have begun pleading guilty and are being sentenced to long prison terms. But for those swept up in his scheme, the damage lingers. An estimated four in five Duke deals resulted in a foreclosed home, hammering values in neighborhoods from Grosse Ile to Fenton already reeling from the recession.

In many neighborhoods, homes involved in the scheme are long abandoned. As people moved out, the weeds grew up and vermin moved in.

“It just keeps getting worse and worse,” said Sandra Fatt, who built a Northville Township home in 1987 that she sold to a Duke associate in 2005. Duke has been tied to two mortgages on the property that have left a murky ownership trail no one has been able to solve.

In a neighborhood of well-tended lawns and well-kept houses, Fatt’s old home sits amid a weed field, its roof falling off and windows ajar. Neighbors said they can’t wait until somebody rescues the home whose cloudy ownership has made its sale impossible.

“I’m just glad we don’t have to move,” said next-door neighbor Pat Sobieski. “I’m not sure anyone would buy (our house).”

Federal prosecutors have labeled Duke the ringleader of one of the largest mortgage fraud rings in the country, helping make Michigan one of the worst areas for mortgage fraud. He pleaded guilty to conspiracy to commit wire fraud and faces up to 15 years in prison when sentenced Nov. 15.

Thirteen former associates face charges and five have been sentenced. Last month, Nicole Rothe, a stripper-turned-mortgage broker connected to $37 million in fraud, was sentenced to 10 years in prison.

Massive operation in place

Duke was one of many who found it easy to fool a lending industry that flooded the market with loans as Wall Street gorged on mortgage-backed securities in the mid-2000s.

Federal agents accused Duke and his co-defendants of arranging loans — targeting homes valued between $350,000 and $600,000 — and then taking a portion of the money for themselves. So-called “straw buyers,” whose income and credit history would be fudged in order to qualify, would get paid for their efforts, and initial monthly payments would be made.
Read more at The Detroit News



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