Sentencing was handed down Wednesday by U.S. District Judge Robert Holmes Bell, who ordered Gahan to five years and 10 months in prison. Following his release Gahan will spend five years under supervision, according to local Michigan-based news publication Mlive.
He was also ordered to pay $8,205,405 in restitution.
Gahan’s co-defendant, former owner of Prime Title Services Scott Hoeft, is currently serving over three years in prison for his role.
"The essence of the fraud was that Mr. Hoeft assisted Gahan in obtaining construction loan financing by agreeing to provide the prospective lenders with fraudulent title commitments that purposefully failed to disclose the existence of prior liens against the property upon which new homes would be constructed," Assistant U.S. Attorney Ronald Stella wrote in court documents, according to MLive.
The two allegedly defrauded banks, lenders, and title companies by taking out multiple mortgages without the proper disclosure of prior leans. Hoeft allegedly wrote the insurance policies.
"This was a very sophisticated and long-running title insurance fraud scheme that involved numerous residential developments," U.S. Attorney Patrick Miles Jr. said in a statement. "Innocent homeowners arrived home to find foreclosure notices on their doors, from banks they had never heard of, solely because Gahan fraudulently diverted closing funds from those banks to his own pocket. The Court's sentence today reflects the seriousness of this financial crime."
Gahan pleaded guilty to the charge of wire fraud, and admitted he had made “horrible decisions out of greed and fear of failure,” his attorney said, according to MLive.
Former Michigan-based real estate developer Charles Gahan was sentenced for his part in an $8 million “mortgage stacking” scheme.