A former owner of a now-defunct mortgage brokerage firm that was heavily involved in the rampant property flipping in Baltimore in the late 1990s was sentenced yesterday to 21 months in federal prison.

Shannon Lynn Mitchell, 31, of Baltimore was sentenced after pleading guilty in October to a single count of mail fraud. She admitted that she was personally responsible for defrauding mortgage lenders out of as much as $800,000.

Mitchell was the third owner of Macallan Funding Inc. to receive a prison sentence as a result of the firm's role in illegal property flipping. Working for a number of flippers, the firm knowingly processed mortgage loan applications containing false information that induced out-of-state lenders to provide loans exceeding the value of the houses they were financing. The false information included inflated appraisals and inaccurate financial details that made unqualified buyers appear to be creditworthy.

In December 2000, Macallan President Michael M. Fishman, who owned 52 percent of the company, received a 30-month prison sentence. At the same time, Scott R. Shinskie, a 24-percent owner who cooperated with federal authorities in a number of prosecutions, was sentenced to 18 months. Mitchell also owned 24 percent of the firm.

Apologizes for actions

Before she was sentenced by U.S. District Judge J. Frederick Motz, Mitchell tearfully apologized for her actions.

She told Motz that she thought at first that there was nothing wrong with including "white lies" in the mortgage applications so that people who would not otherwise qualify could get mortgages, and that the higher interest rates they paid covered losses on loans that went bad.

But, she added, "I should have realized that a lie is always a lie. ... I misled people, and I caused a lot of harm. I should have been honest."

Assistant U.S. Attorney Joseph L. Evans said that each of the Macallan owners had clients involved in flipping. According to a statement of facts to which Mitchell agreed, she worked closely with Scott Dunning Mead who flipped dozens of Baltimore houses.

Mead was sentenced to 64 months in prison in February after pleading guilty to money laundering and conspiracy to commit arson in his flipping scheme. He admitted that he arranged to have a Baltimore rowhouse set ablaze after learning that he could not flip it.

Another sentencing

On Friday, Motz sentenced Oscar Alm to a year and a day in federal prison for his role in property flipping.

In lieu of a fine or restitution to lenders, Motz ordered that Alm contribute $75,000 to two nonprofit groups working to improve the city's housing stock, splitting the funds evenly between the Patterson Park Community Development Corp. and Habitat for Humanity.

Alm, who pleaded guilty in August, admitted that he had bilked lenders out of as much as $800,000.

In a little more than two years, federal prosecutors in Baltimore have obtained convictions or agreements to plead guilty from nearly four dozen people for their roles in property flipping. Three mortgage loan officers are scheduled for trial next month.