Clay McCormack Files

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF TENNESSEE EASTERN DIVISION

UNITED STATES OF AMERICA, ) ) Plantiff, ) ) vs. ) Cr. No.____________________ ) CLAY MCCORMACK ) ) 18 U.S.C. 1001 Defendant. ) 18 U.S.C. 1344 )

INDICTMENT

THE GRAND JURY CHARGES:

INTRODUCTION

1. As used in this indictment:

A. The term loan underwriting documents and information specifically includes, but

is not limited to: Uniform Residential Loan Applications, also known as Form 1003,

(hereinafter referred to as 1003s), personal financial statements, W-2 forms, pay stubs,

tax returns, employment verification forms, verifications of\deposit forms, gift letters,

lease agreements, appraisals, contracts for sale; and;

B. The term closing documents refers to documents required by lenders to be

signed in connection with the sale and purchase of real estate. Closing documents

typically include, but are not limited to: a form commonly referred to as a HUD-1 (U.S.

Department of Housing and Urban Development) which is used to disclose all receipts

and disbursements of monies, and costs associated with the sale and purchase of real

estate; Warranty Deeds; Deeds of Trust; Affidavits of Occupancy; and, Truth-in-Lending

forms.

2. At all times material to this indictment:

2

A. Defendant CLAY MCCORMACK was a real estate closing attorney at Teel,

McCormack, & Maroney, PLC in Jackson, Tennessee.

B. JAMES LEE BISHOP was a real estate investor with several Limited Liability

Companies in Jackson, Tennessee.

C. Community Bank and FirstSouth Bank were and are financial institutions whose

deposits were then insured by the Federal Deposit Insurance Corporation (FDIC).

3. Beginning on or before October 22, 2007, and continuing until at least on or about July

27, 2010, the exact dates being unknown to the Grand Jury, in the Western District of

Tennessee and elsewhere, the defendant,

-------------------------------------------------CLAY MCCORMACK-------------------------------------------------

did knowingly, with other persons known and unknown to the Grand Jury, commit the offenses

against the United States, more specifically to commit bank fraud, and make false statements in

violation of Title 18, United States Code, Sections 1344 and 1001.

OBJECT OF THE SCHEME AND ARTIFICE

4. The object of the scheme was that defendant CLAY MCCORMACK and others would

fraudulently obtain loan proceeds from federally insured institutions that funded mortgage loans.

MANNER AND MEANS OF AND THE SUSBSTANCE OF THE SCHEME AND ARTIFICE

5. The manner and means and the substance of the scheme and artifice to defraud and to

obtain monies and other property by means of false and fraudulent pretenses, representations

and promises, were as follows:

6. It was part scheme and artifice to defraud that JAMES LEE BISHOP would recruit

individuals or limited liability companies to purchase real property for the purpose of investment

from him or one of his limited liability companies.

3

7. It was further part of the scheme and artifice to defraud that JAMES LEE BISHOP would

use defendant CLAY MCCORMACK as the closing attorney for his real estate sales

transactions.

8. It was further part of the scheme and artifice to defraud that at the closings CLAY

MCCORMACK would indicate on the HUD-1 that certain lenders were paid off via a check as a

result of the closing. Defendant CLAY MCCORMACK would then void or instruct others to void

the check that day or days later and reissue to the check to JAMES LEE BISHOP.

9. It was further part of the scheme and artifice to defraud that defendant CLAY

MCCORMACK would cause fraudulent documents to be sent to the new lender.

OVERT ACTS

10. In furtherance of the scheme and to accomplish its objectives, the defendant and others

performed at least one overt act in the Western District of Tennessee and elsewhere, including,

but not limited to, the following:

11. Beginning on or before October 22, 2007, and continuing until at least on or about July

27, 2010, the exact dates being unknown to the Grand Jury, the defendant CLAY

MCCORMACK, being aided and abetted by other persons known and unknown to the Grand

Jury, devised and intended to devise a scheme and artifice to defraud, and to obtain monies

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

12. The scheme and artifice was in substance that defendant CLAY MCCORMACK acted

as closing attorney for the loans in question. In this capacity, defendant CLAY MCCORMACK

or others acting at defendant CLAY MCCORMACKS direction would create a HUD-1, which

indicated a certain lender would have their loan paid in full at the time of the closing. Defendant

CLAY MCCORMACK or others, acting at defendant CLAY MCCORMACKS direction would

also have a check cut to the lender in question and a disbursement worksheet also indicating

the check had been cut to pay the lender. After the closing occurred, defendant CLAY

MCCORMACK or others acting at defendant CLAY MCCORMACKS direction on the same

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date or several days later would void the checks to the lender and issue new checks made

payable to JAMES LEE BISHOP. Thereafter, defendant CLAY MCCORMACK would provide a

letter to the new lender indicating they were in first lien position on the property. Defendant

CLAY MCCORMACK would allow JAMES LEE BISHOP to provide the closing funds at closings

on behalf of the borrowers and indicate on the HUD-1 that the funds were provided by the

borrowers. The specific details of the scheme and artifice are as follows:

COUNT 1

(Bank Fraud)

13. On or about July 17, 2009, the defendant CLAY MCCORMACK, executed the

aforementioned scheme and artifice and;

A. defrauded Community Bank, 3200 North Highland Avenue, Jackson, Tennessee, a

Federal Deposit Insured Corporation (FDIC) institution, and;

B. obtained monies by false and fraudulent pretenses, representations and promises.

C. It was a part of the scheme and artifice to defraud and to obtain money and funds by

means of false and fraudulent pretenses, representations and promises that the defendant

CLAY MCCORMACK closed a residential loan for Community Bank, 3200 North Highland

Avenue, Jackson, Tennessee, then an institution whose deposits where then insured by a

Federal Deposit Insured Corporation (FDIC) institution, involving property known as 319

Fairmont, Jackson, Tennessee, on July 17, 2009 at his law office located at 87 Murray Guard

Drive, Jackson, Tennessee.

D. It was a further a part of the scheme and artifice to defraud and to obtain money and

funds by means of false and fraudulent pretenses, representations and promises that the

defendant CLAY MCCORMACK created or directed the creation of a HUD-1 showing the

Summary of the Borrower and Sellers Transactions. In this document defendant CLAY

MCCORMACK indicated Payoff of first mortgage loan to The Bank of Jackson in the amount

of $36,000 occurred.

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16. It was further a part of the scheme and artifice to defraud and to obtain money and funds

by means of false and fraudulent pretenses, representations and promises that the defendant

CLAY MCCORMACK had check number 1-1057 filled out as follows; the check was dated July

17, 2009, written on Teel, McCormack & Maroney, P.L.C. Attorney Real Estate Trust Account

number 41813585, made payable to The Bank of Jackson in the amount of $36,000 with (504)

Payoff of first mortgage loan to The Bank of Jackson-File: 20090754 written in the memo

section.



CLAY MCCORMACK instructed an employee to void and cancel check number 1-1057 on July

20, 2009 and on the same date have check number 1-1100 created from the above account

made payable to JAMES LEE BISHOP in the amount of $36,000 with (504) Payoff of first

mortgage loan to The Bank of Jackson-File: 20090754 written in the memo section.


by means of false and fraudulent pretenses, representations and promises that the on or about

July 20, 2009, JAMES LEE BISHOP endorsed and deposited check number 1-1100 into

accounts under his control.



CLAY MCCORMACK created or directed the creation of a letter dated December 8, 2009

written to Community Bank. This letter fraudulently advised Community Bank that the bank was

now in a first (1st) mortgage lien against the tract.



CLAY MCCORMACK allowed Premier Funding Group, LLC (registered agent JAMES LEE

BISHOP) to provide the cash from borrower in the amount of $8,613.28 at closing.

6



CLAY MCCORMACK created or directed the creation of a HUD-1 showing the Summary of the

Borrower and Sellers Transactions. In this document defendant CLAY MCCORMACK

indicated the Cash from Borrower payment of $8,613.28 was paid by H & H Properties (the

borrower) full well knowing that the amount had been provided by JAMES LEE BISHOP (the

seller.) In this document defendant CLAY MCCORMACK also indicated the Payoff of first

mortgage loan to The Bank of Jackson in the amount of $36,000 had occurred.

22. On or about July 17, 2009, in the Western District of Tennessee the defendant

-------------------------------------------------CLAY MCCORMACK-------------------------------------------------

did knowingly with other persons known and unknown to the Grand Jury, obtain money and

funds by means of false and fraudulent pretenses, representations and promises as set forth

above, in that he completed or directed the creation of a fraudulent HUD-1 indicating that

$36,000 would be paid to The Bank of Jackson as a payoff of the first mortgage loan when in

truth and fact he converted for himself and others.

All in violation of Title 18, United States Code Section 1344.

COUNT 2

(BANK FRAUD)

23. All of the allegations contained in paragraphs 1 through and including 12 of this

Indictment are re-alleged and incorporated by reference as if fully set forth herein.

24. On or about April 22, 2010, the defendant CLAY MCCORMACK, executed the

aforementioned scheme and artifice and;

A. defrauded FirstSouth Bank, 1862 Hwy 45 Bypass, Jackson, Tennessee, a

Federal Deposit Insured Corporation (FDIC) institution, and;

7

B. obtained monies by false and fraudulent pretenses, representations and

promises.

25. It was a part of the scheme and artifice to defraud and to obtain money and funds by

means of false and fraudulent pretenses, representations and promises that the defendant

CLAY MCCORMACK closed a residential loan for FirstSouth Bank, 1862 Hwy 45 Bypass,

Jackson, Tennessee, a FDIC institution, involving property known as 895 Rushmeade, Jackson,

TN 38305, 40 Stratford, Jackson, Tennessee 38305, 104 North, Jackson, TN 38301, 117

Alexander, 123 Melrose, Jackson, TN 38301 and 43 Larimer Jackson, Tennessee 38301 on

April 22, 2010 at his law office at 87 Murray Guard Drive, Jackson, Tennessee.



CLAY MCCORMACK created or directed the creation of a HUD-1 showing the Summary of the

Borrower and Sellers Transactions. In this document defendant CLAY MCCORMACK

indicated Payoff to Commercial Bank for 104 North in the amount of $40,000 and Payoff to

Bank of Jackson for 40 Stratford in the amount of $73,612 occurred at closing.



CLAY MCCORMACK had check number 1-3773 filled out as follows; the check was dated April

22, 2010 written on Teel, McCormack & Maroney, P.L.C. Attorney Real Estate Trust Account

number 41813585, made payable to The Bank of Jackson in the amount of $73,612 with (508)

Payoff to The Bank of Jackson for 40 Stratford File: 20100402 written in the memo section.





number 41813585, made payable to Commercial Bank & Trust in the amount of $40,000 with

8

(506) Payoff to Commercial Bank for 104 North -$40,000 File: 20100402 written in the memo

section.





number 41813585, made payable to JAMES LEE BISHOP in the amount of $40,000 with (506)

Payoff to Commercial Bank for 104 North - $40,000 File: 20100402 written in the memo

section.





number 41813585, made payable to JAMES LEE BISHOP in the amount of $73,612 with (508)

Payoff to The Bank of Jackson for 40 Stratford File: 20100402 written in the memo section.



CLAY MCCORMACK instructed an employee to void and cancel check numbers 1-3773 and 1-

3774 on May 11, 2010.


by means of false and fraudulent pretenses, representations and promises that on or about April

22, 2010, JAMES LEE BISHOP endorsed and deposited check numbers 1-3775 and 1-3776

into accounts under his control.



9

CLAY MCCORMACK accepted funds at closing in amount of $97,144.54 from JAMES LEE

BISHOP as cash from the borrower.



CLAY MCCORMACK created or directed the creation of a HUD-1 showing the Cash from

Borrower in the amount of $97,144.54 was paid by DRW Investments, LLC (the borrower) full

well knowing that this payment had been made by BISHOP (the seller.) Defendant CLAY

MCCORMACK also filled out the Summary of the Borrower and Sellers Transactions indicating

Payoff to Commercial Bank for 104 North in the amount of $40,000 and Payoff to Bank of

Jackson for 40 Stratford in the amount of $73,612 occurred at closing.

35. On or about April 22, 2010, in the Western District of Tennessee the defendant

-------------------------------------------------CLAY MCCORMACK-------------------------------------------------

did knowingly with other persons known and unknown to the Grand Jury, obtain money and

funds by means of false and fraudulent pretenses, representations and promises as set forth

above, in that he completed or directed the creation of a fraudulent HUD-1 indicating that

$40,000 would be paid to Commercial Bank as a payoff of the first mortgage loan on 104 North,

Jackson, TN and that $73,612 would be paid to Bank of Jackson as a payoff of the first

mortgage loan on 40 Stratford, Jackson, TN when in truth and fact he converted the $40,000

and $73,612 for himself and others.

All in violation of Title 18, United States Code, Sections 1344.

COUNT 3

(FALSE STATEMENT)



10

37. From on or about July 17, 2009, to on or about July 20, 2009, in the Western District of


-------------------------------------------------CLAY MCCORMACK-------------------------------------------------

in a matter within the jurisdiction of the United States Department of Justice, did knowingly and

willfully make a false, fictitious, and fraudulent material statement and representation, as

summarized below:

A. On or about July 17, 2009, in Jackson, Tennessee, the defendant CLAY

MCCORMACK created or directed the creation of a HUD-1 showing the Summary of

the Borrower and Sellers Transactions. In this document, the defendant CLAY

MCCORMACK indicated the Cash from Borrower payment of $8,613.28 was paid by

H&H Properties(the borrower) full well knowing the amount was provided by Premier

Funding Group, LLC (registered agent JAMES LEE BISHOP (the seller). In this

document, the defendant CLAY MCCORMACK also indicated the Payoff of first

mortgage loan to the Bank of Jackson in the amount of $36,000.

B. The defendant CLAY MCCORMACK had check number 1-1057 filled out as follows:

the check was dated July 17, 2009, written on Teel, McCormack & Maroney, P.L.C.

Attorney Real Estate Trust Account number 41813585, made payable to the Bank of

Jackson in the amount of $36,000 with (504) Payoff of first mortgage loan to the

Bank of Jackson-File: 20090754 written in the memo line.

C. The defendant CLAY MCCORMACK instructed an employee to void and cancel

check number 1-1057 on July 20, 2009, and on the same date check the defendant

CLAY MCCORMACK ordered the same employee to create number 1-1100 from

the above account payable to Lee Bishop in the amount of $36,000 with (504)

Payoff of first mortgage loan to The Bank of Jackson-File: 20090754 again written in

the memo line of the check.

D. The defendant CLAY MCCORMACK signed the HUD-1 knowing it was false.

11

All in violation of Title 18, United States Code, Section 1001.

COUNT 4

(FALSE STATEMENT)



39. From on or about April 22, 2010, to on or about May 11, 2010, in the Western District of


-------------------------------------------------CLAY MCCORMACK-------------------------------------------------

in a matter within the jurisdiction of the United States Department of Justice, did knowingly and

willfully make a false, fictitious, and fraudulent material statement and representation, as

summarized below:

A. On or about April 22, 2010, in Jackson, Tennessee, the defendant CLAY

MCCORMACK created or directed the creation of a HUD-1 showing the Summary of

the Borrower and Sellers Transactions. In this document, the defendant CLAY

MCCORMACK indicated the Cash from Borrower payment of $97,144.54 was paid

by DRW Investments, LLC (the borrower) full well knowing the amount was provided

by BISHOP (the seller). In this document, the defendant CLAY MCCORMACK also

indicated Payoff of Commercial Bank for 104 North in the amount of $40,000 and

Payoff to the Bank of Jackson for 40 Stratford in the amount of $73,612.

B. The defendant CLAY MCCORMACK had check number 1-3774 filled out as follows:

the check was dated April 22, 2010, written on Teel, McCormack & Maroney, P.L.C.

Attorney Real Estate Trust Account number 41813585, made payable to the

Commercial Bank & Trust in the amount of $40,000 with (506) Payoff to Commercial

Bank for 104 North-File: 20100402. Defendant had check number 1-3773 filled out

12

as follows: the check was dated April 22, 2010, written on Teel, McCormack &

Maroney, P.L.C. Attorney Real Estate Trust Account number 41813585, made

payable to The Bank of Jackson in the amount of $73,612 with (508) Payoff to The

Bank of Jackson for Stratford-File: 20100402.

C. The defendant CLAY MCCORMACK had check number 1-3775 filled out as follows:

the check was dated April 22, 2010, written on Teel, McCormack & Maroney, P.L.C.

Attorney Real Estate Trust Account number 41813585, made payable to Lee Bishop

in the amount of $40,000 with (506) Payoff to Commercial Bank for 104 North-File:

20100402. The defendant CLAY MCCORMACK had check number 1-3776 filled

out as follows: the check was dated April 22, 2010, written on Teel, McCormack &

Maroney, P.L.C. Attorney Real Estate Trust Account number 41813585, made

payable to Lee Bishop in the amount of $73,612 with (508) Payoff to The Bank of

Jackson for Stratford-File: 20100402.

D. The defendant CLAY MCCORMACK instructed an employee to void and cancel

check numbers 1-3773 and 1-3774 on May 11, 2010.

E. The defendant CLAY MCCORMACK signed the HUD-1 knowing it was false.

All in violation of Title 18, United States Code, Section 1001.

FORFEITURE ALLEGATION

Upon conviction of one or more of the offenses alleged in Counts 1 and 2 of this

Indictment the defendant, CLAY MCCORMACK, shall forfeit to the United States pursuant to 18

U.S.C 981(a)(1)(c) and 28 U.S.C 2461 any property constituting or derived from proceeds

obtained directly or indirectly as a result of the Bank Fraud charge in Counts 1 and 2.

1. MONEY JUDGMENT

13

A sum of money equal to $ 3,823,366.68 in United States funds representing the

amount involved in the Bank Fraud charge in Counts 1 and 2.

2. SUBSTITUTE ASSETS

If any of the above described forfeitable property, as a result of any act of omission

of the Defendant:

A: cannot be located upon the exercise of due diligence;

B: has been transferred or sold to, or deposited with, a third party;

C: has been placed beyond the jurisdiction of the court;

D: has been substantially diminished in value; or

E: has been commingled with other property which cannot be divided without

difficulty; it is the intent of the United States, pursuant to 21 U.S.C 853(p) as

incorporated by 18 U.S.C 982(b), to seek forfeiture of any other property of said

defendant up to the value of the forfeitable property as described above all pursuant

to 18 U.S.C 981 (a)(1)(c) and 28 U.S.C 2461 (c).

A TRUE BILL __________________________ F O R E P E R S O N DATE: ______________________________ EDWARD L. STANTON III UNITED STATES ATTORNEY ____________________________________ VICTOR L. IVY ASSISTANT UNITED STATES ATTORNEY

}bk1{Form 6. Summary of Schedules}bk{

United States Bankruptcy CourtWestern District of Tennessee

In re

,Debtors

Case No.

Chapter

11-12409

7

Clay Morton McCormack,Sally Jo McCormack

B6 Summary (Official Form 6 - Summary) (12/07)

Indicate as to each schedule whether that schedule is attached and state the number of pages in each. Report the totals from Schedules A,B, D, E, F, I, and J in the boxes provided. Add the amounts from Schedules A and B to determine the total amount of the debtors assets.Add the amounts of all claims from Schedules D, E, and F to determine the total amount of the debtors liabilities. Individual debtors mustalso complete the "Statistical Summary of Certain Liabilities and Related Data" if they file a case under chapter 7, 11, or 13.

SUMMARY OF SCHEDULES

ATTACHED NO. OFNAME OF SCHEDULE ASSETS LIABILITIES OTHER(YES/NO) SHEETS

A - Real Property

B - Personal Property

C - Property Claimed as Exempt

D - Creditors Holding Secured Claims

E - Creditors Holding UnsecuredPriority Claims

F - Creditors Holding UnsecuredNonpriority Claims

G - Executory Contracts andUnexpired Leases

H - Codebtors

I - Current Income of IndividualDebtor(s)

J - Current Expenditures of IndividualDebtor(s)

Total Number of Sheets of ALL Schedules

Total Assets

Total Liabilities

(Total of Claims on Schedule E)

Software Copyright (c) 1996-2011 - CCH INCORPORATED - www.bestcase.com Best Case Bankruptcy

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

1 0.00

4 45,546.50

2

22,542.261

75,000.002

9,237,359.4615

1

5

1 5,075.20

1 7,539.00

33

45,546.50

9,334,901.72

Case 11-12409 Doc 22 Filed 08/25/11 Entered 08/25/11 16:30:15 Desc Main Document Page 1 of 54

IN THE UNITED STATES DISTRICT COURTFOR THE WESTERN DISTRICT OF TENNESSEEEASTERN DIVISIONINDICTMENTTHE GRAND JURY CHARGES:INTRODUCTIONOBJECT OF THE SCHEME AND ARTIFICEMANNER AND MEANS OFOVERT ACTSAll in violation of Title 18, United States Code Section 1344.All in violation of Title 18, United States Code, Sections 1344.All in violation of Title 18, United States Code, Section 1001.COUNT 4(FALSE STATEMENT)

Clay McCormack Files

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