IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TENNESSEE EASTERN DIVISION UNITED STATES OF AMERICA,

Plantiff, vs. CLAY MCCORMACK Defendant. ) ) ) ) ) ) ) ) ) )

Cr. No.____________________

18 U.S.C. 1001 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:

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.

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 3

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. 4

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. 17. 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 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. 18. 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 on or about July 20, 2009, JAMES LEE BISHOP endorsed and deposited check number 1-1100 into accounts under his control. 19. 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 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. 20. 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 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. 5

21.

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 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;

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. 26. 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 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. 27. 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 1-3773 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. 28. 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 1-3774 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 Commercial Bank & Trust in the amount of $40,000 with 7

(506) Payoff to Commercial Bank for 104 North -$40,000 File: 20100402 written in the memo section. 29. 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 1-3775 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 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. 30. 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 1-3776 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 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. 31. 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 instructed an employee to void and cancel check numbers 1-3773 and 13774 on May 11, 2010. 32. 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 on or about April 22, 2010, JAMES LEE BISHOP endorsed and deposited check numbers 1-3775 and 1-3776 into accounts under his control. 33. 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 accepted funds at closing in amount of $97,144.54 from JAMES LEE BISHOP as cash from the borrower. 34. 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 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) 36. 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.

37.

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

Tennessee and elsewhere, the defendant, -------------------------------------------------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. 10

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

COUNT 4 (FALSE STATEMENT) 38. 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. 39. From on or about April 22, 2010, to on or about May 11, 2010, in the Western District of

Tennessee and elsewhere, the defendant, -------------------------------------------------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

11

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

12

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

__________________________ FOREPERSON DATE: ______________________________

EDWARD L. STANTON III UNITED STATES ATTORNEY

____________________________________ VICTOR L. IVY ASSISTANT UNITED STATES ATTORNEY

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