11-30-2003 -- Jenkins, et. al. -- Indictment/Arrests -- News Release

Five Indicted for Using Drug Profits to Buy Rundown Houses, Reaping Huge Profits Through Unwitting Buyers and Fraudulent Mortgages

CAMDEN - A major Camden drug wholesaler and four co-conspirators were arrested in early morning raids today, dismantling a ring that used drug proceeds to purchase abandoned and dilapidated residential properties in Camden and fraudulently resell the properties to unqualified, unsophisticated buyers at enormous profit, U.S. Attorney Christopher J. Christie announced.

A 37-count federal Indictment unsealed this morning with the defendants' arrests describes how the group used drug proceeds to finance the purchase of at least 25 homes and then used crack cocaine as payment for cosmetic repairs. The total sale price of the homes sold to unwitting buyers was more than $1 million. The Indictment includes two forfeiture counts which seek a total of $1.988 million from the defendants.

According to the Indictment, Kenneth D. Jenkins, 34, of Preamble Drive in Mt. Laurel, was the leader of the organization, which purchased substantial quantities of powder cocaine in Philadelphia and New York City. The cocaine was then transported to "stash houses" in the Camden area, where it was "cooked" to produce crack cocaine. The Indictment alleges that the enterprise netted profits which sometimes exceeded $300,000 per week.

The Indictment states that Jenkins conspired with his live-in girlfriend, Sabena L. Ingalls, 32, a licensed real estate agent; his father, Walter U. Jenkins, 63, of W. Park Drive in Pennsauken and a City of Camden maintenance worker; Ingalls' mother, Rita L. Jackson-Paulk, 49, of S. 7th Street in Camden, a Camden school crossing guard; and Ronald Rogers, 43, of S. Atlanta Street in Camden, a purported handyman and proprietor of an entity known as Newmark Construction.

Kenneth Jenkins is accused of purchasing cheap, run-down properties in Camden, and then "flipping" them at inflated prices by securing fraudulent mortgage loans for unsophisticated and unqualified borrowers. Jenkins relied on the expertise of Ingalls, as licensed real estate agent, to assist him in targeting naive, sometimes illiterate or even mentally disabled individuals to purchase the homes.

The defendants, according to the Indictment, would then create false and fraudulent paperwork, such as, fake pay-stubs, credit verifications, employment histories, W-2 Forms, and IRS tax returns. The Indictment also charges that the defendants used fake names and social security numbers to qualify individuals for mortgage loans. Furthermore, according to the Indictment, for one property transaction the defendants used the identity of a seven-year-old child to gain financing approval.

According to the Indictment, cosmetic repairs were completed on the homes to make them appear habitable and conceal material deficiencies. The Indictment states that Jenkins paid Rogers in crack cocaine in exchange for the cosmetic repair work; Rogers then paid his work crew with the crack cocaine.

The Indictment states that in order to avoid detection by law enforcement, Jenkins and Ingalls conspired with family members and others to buy and sell the properties and to launder their ill-gotten gains. According to the Indictment, properties were purchased and sold in the names of Jenkins, Ingalls, Jenkins' father and Ingalls' mother, along with at one other individual and a company named Panache Enterprises , L.L.C. Panache Enterprises, controlled by Ingalls, was purported to be an investment firm that purchased and sold residential real estate, with addresses located in Pennsauken and Mt. Laurel.

"This was a cruel hoax - drug dealers preying on the American dream of home ownership," Christie said. "It's also a horrendous crime against the City of Camden, as it tries to rebuild its neighborhoods and expel drug dealers from them. Our commitment to helping Camden fight back has been demonstrated again and again, and we will not back down from that commitment."

The properties were is such poor physical condition, Christie said, that most of the buyers were forced to move out within weeks or months because of faulty plumbing, electrical hazards, water damage, wood rot and holes in roofs.

The government and taxpayers too were victimized, since a majority of the mortgages were backed by the federal government through a home-ownership assistance program operated by the Federal Housing Administration (FHA), a division of the U.S. Department of Housing and Urban Development (HUD). The FHA administers the Mortgage Loan Insurance Program, which assists low- and moderate-income borrowers to obtain financing for home purchases. As compared to conventional mortgages, FHA-insured mortgage loans typically have less stringent income and credit eligibility guidelines, lower down payment requirements and reduced closing costs.

The FHA-administered Mortgage Loan Insurance Program encourages private lenders designated by HUD under its Direct Endorsement Program to make mortgage loans to qualified low- and moderate-income borrowers by protecting the lenders against loan defaults through a government-backed payment guarantee.

According the Indictment, most of the buyers defaulted on their mortgage loans, costing private lenders and the federal government hundreds of thousands of dollars.

The two-year investigation was a cooperative effort of the FBI's Cherry Hill Field Office, the IRS Criminal Investigation Newark Field Office, the HUD Office of Inspector General, the Drug Enforcement Administration's Camden Resident Office, and the Social Security Administration Office of Inspector General.

Count One of the Indictment charges conspiracy to commit mail and wire fraud; Counts Two and Three charge substantive mail fraud counts; Counts Four through 22 charge substantive wire fraud counts; Count 23 charges conspiracy to distribute more than five kilograms of powder cocaine and more than 50 grams of crack cocaine; Count 24 charges conspiracy to commit money laundering; Counts 25 through 33 charge substantive money laundering; and counts 34 through 37 charge substantive money laundering /concealing counts.

See Table #1 for a breakdown of counts against each defendant.

The defendants are scheduled to have initial appearances today before U.S. Magistrate Joel B. Rosen at approximately 2:00 p.m.

The maximum penalty for the charge of conspiracy to commit mail and wire fraud in Count One is 5 years in prison and a $250,000 fine. The mail fraud and wire fraud charges each carry a maximum penalty of 30 years in prison and a $250,000 fine. The charge of conspiracy to distribute more than 5 kilograms of powder cocaine and more than 50 grams of crack cocaine carries a mandatory minimum sentence of 10 years imprisonment and a maximum penalty of life and a $4 million fine. The charge of conspiracy to commit money laundering and charge of substantive money laundering carries maximum penalty of 10 years in prison and a $250,000 fine. Finally, the charges of money laundering/concealment each carry a maximum penalty of 20 years in prison and a $500,000 fine.

Under U.S. Sentencing Guidelines, U.S. District Judge Freda L. Wolfson would, upon conviction, determine the actual sentence based upon a formula that takes into account the severity and characteristics of the offense, as well as the defendant's criminal history, if any. Parole has been abolished in the federal system. Under Sentencing Guidelines, defendants who are given custodial terms must serve nearly all that time.

See Table #2 for a listing of properties identified in the Indictment along with each property's purchase price and sales price.

The Indictment is available by contacting the U.S. Attorney's Office Public Affairs Office at either 856-757-5233.

Despite Indictment, every defendant is presumed innocent, unless and until found guilty beyond a reasonable doubt, following a trial at which the defendant has all of the trial rights guaranteed by the U.S. Constitution and federal law.

Christie credited Special Agents of the FBI Cherry Hill Field Office, under the direction of Special Agent in Charge Jeffrey Lampinski; the IRS-CI Newark Field Office, under the direction of Special Agent in Charge Patricia J. Haynes; the Drug Enforcement Agency's Camden Resident Office, under the direction of Special Agent in Charge Michael Pasterchick, Jr.; HUD New Jersey Office of Inspector General Investigation, under the direction of Special Agent in Charge Ruth Ritzema of the N.Y.- N.J. Regional Office for Housing Urban Development Office of Inspector general Investigations; and the Social Security Administration Office of Inspector General, under the direction of Edward J. Ryan, Regional Inspector General for the New York Field Division, for developing the investigation which results in today's Indictment and arrests.

Christie also thanked the member agencies of the High Intensity Drug Traffic Area Task Force, including the Camden County Prosecutor's Office, the Camden County Sheriff's Department, and the Camden Police Department, for their assistance in enforcement activities.

The Government is represented by Assistant U.S. Attorneys Marc P. Ferzan and David Bocian of the Criminal Division in Camden and Trenton.

- end -

TABLE #1

Counts Against Each Defendant

Kenneth Jenkins is charged with one count of conspiracy to commit mail and wire fraud; two counts of mail fraud; 18 counts of wire fraud; one count of conspiracy to possess with the intent to distribute more than 5 kilograms of cocaine and more than 50 grams of crack cocaine; one count of conspiracy to engage in monetary transaction in criminally derived property of a value greater than $10,000, approximately $825,000; eight counts of money laundering; and four counts of money laundering/concealing.

Sabena Ingalls is charged with one count of conspiracy to commit mail and wire fraud; two counts of mail fraud; 19 counts of wire fraud; one count of conspiracy to possess with the intent to distribute more than 5 kilograms of cocaine and more than 50 grams of crack cocaine; one count of conspiracy to engage in monetary transaction in criminally derived property of a value greater than $10,000, approximately $825,000; nine counts of money laundering; and four counts of money laundering/concealing.

Walter Jenkins is charged with one count of conspiracy to commit mail and wire fraud; six counts of wire fraud; one count of conspiracy to engage in monetary transaction in criminally derived property of a value greater than $10,000, approximately $825,000; three counts of money laundering; and four counts of money laundering/concealing.

Rita Jackson is charged with one count of conspiracy to commit mail and wire fraud: two counts of wire fraud; one count of conspiracy to engage in monetary transaction in criminally derived property of a value greater than $10,000, approximately $825,000; and one count of money laundering.

Ronald Rogers is charged with one count of conspiracy to commit mail and wire fraud; 10 counts of wire fraud; and one count of conspiracy to possess with the intent to distribute more than 5 kilograms of cocaine and more than 50 grams of crack cocaine.

TABLE #2

Listing of Properties Identified in the Indictment

PROPERTY, PURCHASE PRICE AND FRAUDULENT RESALE PRICE

1346 Browning Street: $6000 -- $37,000

1521 Newport Street: $4,500 -- $45,000

2875 Harrison Avenue: $10,000 -- $29,900

1641 Pulaski Street: $11,000 -- $39,900

1620 Pulaski Street: $8,105 -- $39,900

1258 Lansdowne Avenue: $5,000 -- $39,900

1486 Bradley Avenue: $12,900 -- $49,900

562 Raritan Street: $17,000 -- $39,900

1082 South Merrimac Road: $23,500 -- $42,500

1061 Thurman Street: $6,000 -- $39,900

1668 Norris Street: $12,000 -- $39,900

948 South Collings Road: -- $14,401 -- $49,900

1272 Park Boulevard: $5,000 -- $52,000

1140 South Merrimac Road: $14,000 -- $42,000

826 Sylvan Street: $4,250 -- $42,000

1517 Minnesota Road: $19,000 -- $49,900

2870 Kansas Road: $17,000 -- $47,000

1111 Empire Avenue: $7,000 48,760

298 Rand Street: $7,000 -- $46,000

1109 South Merrimac Road: $15,000 -- $41,000

2755 North Congress Road: $8,500 -- $56,400

1145 Carl Miller Boulevard: $13,500 -- $49,900

1329 Browning Road: $10,500 -- $48,900

515 Randolph Street: $18,000 -- $53,000

1111 Louis Street: Unknown -- $40,000

1359 Dayton Street: $20,000 -- $53,000