A Blue Bell man was indicted Aug. 23 for carrying out an alleged scheme to defraud the federal government by providing inflated appraisals of properties seeking to obtain Home Equity Conversion Mortgages.

Eugene Peter Kenworthy Jr., 50, was indicted on charges of wire fraud, false statements for the purpose of influencing the Federal Housing Administration, aggravated identity theft, and failure to file a tax return, according to the U.S. Attorney’s Office.

If convicted, Kenworthy faces a maximum possible sentence of 166 years’ imprisonment, five years of supervised release, a $5.050 million fine, and a $1,000 special assessment.

HECM loans, commonly referred to as reverse mortgages, are insured by the Federal Housing Authority, the indictment states. When a borrower, or estate, sells a property on which an HECM loan was taken, if the proceeds of the sale are insufficient to repay the loan, the FHA pays the lender the deficit.

Kenworthy allegedly inflated the appraisals of properties for which he submitted reports to certify the HECM loans, resulting in the payment of more than $3 million by the FHA to cover loans that went into default. The charges against him grew out of a grand jury investigation, according to the indictment.

From 2010 to 2016, Kenworthy appraised approximately 714 properties, which were the subject of applications for reverse mortgages, using the electronic signatures of five certified real estate appraisers, without their knowledge, to certify 294 appraisal reports he wrote for the HECM loans, the indictment says. He used his own signature to certify the other 420 appraisal reports he wrote, it says.

Kenworthy wrote most of the appraisals for one mortgage broker, which paid him, or his appraisal company, approximately $450 per appraisal, the indictment says. In some of the appraisal reports he wrote for the reverse mortgages, he falsely inflated valuations for the properties, which, in turn, fraudulently inflated the loan amount, it says.

Numerous properties he wrote appraisal reports for went into foreclosure, the indictment says. As of July 2017, of the 714 properties for which Kenworthy wrote the appraisal report, either using his own name or the name of another appraiser, the FHA paid 53 claims totaling almost $3.7 million on foreclosed properties, because the value of the properties was insufficient to cover the HECM loan balance owed to the lender upon the sale of the property, it says.

In January 2016, the Department of Housing and Urban Development suspended Kenworthy, barring him from performing any appraisals for FHA-insured mortgage loans, including HECM loans, the indictment says.

The indictment also charges Kenworthy with failing to file tax returns for 2011 and 2012.

The case was investigated by the United States Department of Housing and Urban Development — Office of Inspector General, and the Internal Revenue Service — Criminal Investigation, and is being prosecuted by Assistant United States Attorney Karen L. Grigsby.

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