SOUTH BEND — A federal judge this morning sentenced Michael Sheneman to eight years in prison for running a local mortgage fraud scheme that spanned four years and involved at least 60 properties in South Bend.
Sheneman, 59, who had not yet spoken publicly about the charges, broke his silence at the hearing.
He spoke for nearly an hour maintaining his innocence, at times taking a defensive tone.
"I sincerely did not try to take advantage of people," Sheneman said, his eyes focused on U.S. District Judge John DeGuilio.
But a jury believed otherwise at his May trial. Jurors convicted him of four counts of wire fraud for running a scheme with his son, Jeremie, that took advantage of unsophisticated individuals looking to become real estate investors in South Bend.
The Shenemans acquired dozens of blighted properties between 2003 and 2005 and sold them to the buyers, promising they would make a profit off the rentals. They perpetrated the scheme using two business names, Tri-State Mortgage and Superior Mortgage Lending.
In brokering the deals, they falsified buyers’ income and assets, forged signatures, refused to let buyers see the interior of the properties, and concealed from lenders the fact that buyers had simultaneously applied for other mortgage loans, according to federal prosecutors.
Sheneman denied all of this at today’s hearing. He said he never owned Tri-State or Superior, and said the U.S. government misled the jury by implying he and Jeremie collected millions from the deals.
He said repeatedly that each of the four victims named in the case freely entered the deal and signed paperwork that explained how it would work.
He said the properties were not in disrepair and that he spent thousands of dollars to rehab them.
"It bothers me how much the community had to pay for this trial," he said.
He blamed the souring economy for the losses that the buyers and lenders incurred.
The government calculated the Shenemans’ scheme amounted to more than $1 million in losses. The victims acquired close to a dozen properties each. The homes were located on Sherman Avenue, College Street, Brookfield Street, Olive Street and Cottage Grove Avenue, among others.
The judge ordered Sheneman to turn himself in by 9 a.m. Oct. 13 to begin serving his sentence.
He also ordered Sheneman to pay restitution to six different lenders totaling $269,967. He will start making payments on the restitution, no less than $100 per month, when he is released from prison, the judge said. The judge ordered him to spend three years after prison on supervised release.
Jeremie Sheneman, who was also convicted of four counts of wire fraud, is scheduled to be sentenced Oct. 13.
Read more in Thursday’s Tribune.