Round Lake Beach residents indicted in mortgage scam

Two Round Lake Beach residents were indicted this week on charges of fraud for their alleged participation in a mortgage scam.

Loan processor Rita McKenzie, 39, and Carl McMahan, 42, are now considered fugitives, said U.S. Attorney spokesman Randall Samborn.

They were indicted Wednesday on accusations that they actively falsified or knew records were falsified to convince banks to issue home loans to shell buyers. McKenzie and McMahan were added to the case this week, along with a loan officer and an appraiser from the south suburbs. The four joined two original defendants, two loan officers from Chicago and the south suburbs, who were originally indicted in December. All but McKenzie and McMahan are scheduled for arraignment March 6 at 10:30 a.m. before Judge Martin Ashman.

McMahan, who operated a home reconstruction business, is accused of one count of wire fraud for his role in the falsification of income and employment records for the purchase of at home at 5603 S. Paulina in Chicago. McKenzie was charged with four counts of wire, mail and bank fraud for the same transaction and three other shell purchases, also on Chicago's South Side. She was also charged with identity theft for using the social security number of someone else in her purchase of a home.

Prosecutors also allege that the participants of the scam in some cases would have the properties falsely appraised to inflate the value and then pocket the excess value.