Feds charge North Miami mayor with mortgage fraud

Prosecutors say Lucie Tondreau‘s radio show played a key recruiting role in a mortgage fraud scheme that cost lenders $8 million.

05/19/2014 10:33 AM

05/19/2014 9:04 PM

Before she was elected mayor of North Miami last year, Lucie Tondreau co-hosted several radio programs that federal authorities say were the key to an $8 million mortgage fraud scheme.

According to an indictment unsealed on Monday, Tondreau and co-host Karl Oreste, a mortgage company owner, used the Creole-language airwaves to reel in “straw borrowers” who filed bogus loan applications to buy 20 homes across South Florida — and then cut the future mayor and her partners in on the profits.

Tondreau, 54, technically wasn’t under arrest Monday — but only because she wasn’t home when FBI agents showed up at her door. She was attending a convention in Las Vegas.

But she faces criminal charges when she returns, possibly as early as Monday night, and a potential suspension from office by Gov. Rick Scott, who has the power to remove elected officials charged with a crime. Tondreau surrendered Tuesday morning and was in federal custody.

“Our office is aware of this situation and will take appropriate action once federal officials provide the indictment,” said John Tupps, a spokesman for Scott’s office. “Governor Scott believes every public official should be held to the highest ethical standards.”

The federal charges are just the latest legal troubles for Tondreau, who last June became the city’s first Haitian-American female mayor. She handily defeated Kevin Burns, a white candidate, in an election fraught with racial tensions because of the changing demographics of one of Miami-Dade’s largest cities.

But her campaign quickly faced state scrutiny. Last year, state prosecutors linked online absentee-ballot requests made in bulk to her campaign office. Florida law prohibits ballot requests to come from anyone other than voters themselves or their family. Tondreau has not been charged and has denied any wrongdoing

Her supporters remain steadfast — at least for now. Former North Miami Mayor Andre Pierre also said he and many others will continue to back the mayor despite the investigations. He urged the public to wait for the cases to play out before jumping to conclusions.

“Nothing changes as far as my support for the mayor. If the governor steps in and removes her from office, the city council will have to figure out the best way to proceed,” Pierre said. “Personally, for me, nothing has changed.”

Charged along with Tondreau are Oreste, 56, of Miramar, and two other defendants, Okechukwu Josiah Odunna, 49, a disbarred Lauderdale Lakes lawyer, and Kelly Augustin, 57, a former North Miami recruiter for Oreste’s mortgage firm. All four face charges of conspiring to commit wire fraud and actual wire fraud between 2005 and 2008 — offenses that carry up to 20 years in prison. Prosecutors claim that lenders suffered loan losses of $8 million.

Oreste made a first appearance Monday in Miami federal court. Magistrate Judge John O’Sullivan released him on a $50,000 bond, based on an agreement between prosecutor Lois Foster-Steers and defense attorney Frank Rubino. He declined comment.

Tondreau’s defense attorney, Ben Kuehne, told The Miami Herald that his client called after family members notified her that FBI agents had come to her North Miami home with an arrest warrant.

“I would have liked to surrender her voluntarily,” Kuehne said. “That’s what I’m working on now.”

While federal agents searched for her in Miami, Tondreau was on the other side of the country attending RECon, the International Council of Shopping Centers' global real estate convention, in Las Vegas.

City spokeswoman Pam Solomon said Tondreau and Lesly Prudent, coordinator of the the city's Community Redevelopment Agency, are at the conference to attract businesses to North Miami. Solomon said Tondreau was planning to cut her Vegas trip short to return to Miami Monday evening or Tuesday.

Tondreau did not respond to voice mail or texts sent to her cellphone.

News of the federal charges quickly spread through the community.

State Rep. Daphne Campbell, who campaigned for the then-mayoral candidate during the 2013 city elections, said she did not know the full details but said her support had not waned.

“I’m still supporting her; she is part of the Haitian community,” Campbell said.

But some members of the North Miami City Council are bracing for a possible suspension or removal from office.

In the past year, three sitting South Florida mayors — Manny Marono of Sweetwater, Michael Pizzi of Miami Lakes and Steve Bateman of Homestead — were removed from office by Gov. Rick Scott after they were arrested on corruption-related charges.

City Councilman Scott Galvin said the council would likely appoint an interim mayor until an election can be held within two months of Tondreau's removal. Voters would choose a new mayor to serve out the rest of Tondreau's two-year term.

“It comes at a very unfortunate time,” Galvin said. “We will have to handle yet another controversy in stride and keep the city business moving forward.”

Tondreau is a veteran public relations and political consultant, most recently as the outreach specialist for the Biscayne Landing project through her company Tondreau and Associates.

She was recently treasurer of NIC Investment Corps, which is run out of her North Miami-based office by Charles Nacivre, her campaign manager.

For years, Tondreau has been a trusted voice on Creole-language radio. Long before she became North Miami mayor, Tondreau built a reputation in the 1980s and ‘90s as a vocal Haitian rights activist in South Florida.

Tondreau hosted a number of radio programs on the AM dial, including L’ouvri Je or Open Your Eyes. She is also a regular guest on Haitian targeted programs on WLQY 1320 AM and Radio Mega 1700 AM.

Shortly after the mayoral election, Tondreau said she would ask the city attorney for an opinion if she could could continue her side job as a radio host. It’s unclear if Tondreau currently has programs on the air.

According to the federal indictment, Tondreau and Oreste teamed up to host several radio programs that advertised his brokerage company, KMC Mortgage. They’re accused of recruiting and paying some of those listeners and others to pose as borrowers to buy South Florida real estate, prosecutors said. Augustin, a KMC Mortgage employee, also allegedly recruited straw borrowers.

Oreste and Odunna, the disbarred Florida lawyer who owned a title company, prepared loan applications on behalf of the straw borrowers to purchase homes selected by the mortgage broker, according to the indictment. They falsified the employment, income and other personal information to help the borrowers qualify for loans, indicating their purchases were for primary residences.

Oreste, Odunna and other co-conspirators fabricated — and in some instances duplicated — federal government loan forms, the indictment said. The paperwork grossly inflated the purchase price of the properties so the straw borrowers could obtain bigger mortgages.

At closings, some of the loan proceeds were disbursed to Oreste through his business, JR Investment and Mortgage Corp., or other bank accounts, or were diverted to Odunna‘s title company.

Oreste also paid off recruiters, such as Tondreau and Augustin, along with straw borrowers, prosecutors said. He also transferred a substantial portion of the loan proceeds to LTO Investment Corp., which was controlled by Tondreau, they said.

Tondreau, prosecutors alleged, used those funds to make mortgage payments to sustain the flow of home loans, and she used some of that money for her “personal benefit.”

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