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Four face federal indictment over sub-prime mortgage fraud

A court gavel
A court gavel

MILWAUKEE, WI (WTAQ) - Four people are under federal indictment, accused of defrauding a sub-prime mortgage pool of nine-and-a-quarter million dollars. 

They're accused of fraudulently transferring troubled mortgages to the now-defunct Central States Mortgage Company of suburban Milwaukee -- where they allegedly siphoned the money. 

Three of the defendants used to work at Central States. 

Its founder, 66-year-old Richard Jungen, is charged with three counts of fraud along his ex-wife Elaine Jaeger and former chief financial officer Jerome Poehnelt. 

The fourth person, David Chapman, is charged with three counts of fraud, obstruction, and lying to investigators. 

The indictments were handed down August 27th but were sealed until this week. 

They were handled so quietly, that the Milwaukee Journal Sentinel said the defendants were surprised that an indictment was handed down. 

Central States Mortgage became Wisconsin's largest mortgage house until it went into receivership in 2009, when the foreclosure crisis was at its worst.  None of the defendants are under arrest, and court dates have not been set. 

Central States suspended its operations after a federal racketeering suit was filed in 2009 accusing Jungen and his associates of defrauding 15-million dollars. 

That suit was later dropped. 

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