A two-time Kansas congressional candidate has been charged with illegally using donated campaign money to help set up a fraudulent home mortgage.
A federal grand jury on Wednesday indicted Adam Taff, a former Republican challenger to U.S. Dennis Moore in Kansas' 3rd Congressional District, on one count of wire fraud and one count of using political donations for personal use.
The charges came as a shock to many, including Bill Lacy, director of Kansas University's Dole Institute of Politics. Taff served as one of the Dole Institute's first two "senior fellows" during the spring semester and led a study group titled "In the Crosshairs: Realities of Running a High-Profile U.S. Congressional Race."
"Here's a fellow that I think everyone presumed was squeaky clean, and one would hope that eventually it will come out that that is the truth," Lacy said. "But he's been charged with something that is obviously a serious crime, and it's troubling."
Both charges are related to the 40-year-old Taff's purchase of a $1.2 million Lake Quivira home from a business associate starting in November 2003, as he was gearing up for a second congressional campaign.
At the time, Taff worked for Myers National Mortgage Company in Overland Park. Prosecutors allege he conspired with the company's chairman, John D. Myers, 48, Leawood, to make it appear Taff had made a down payment on Myers' home when in fact he hadn't.
To accomplish the scheme, Taff withdrew $175,000 in donated money from his campaign accounts and put it toward a $300,000 bank check payable to Myers and his wife, according to the indictment. Taff and Myers then met with a title agent in Overland Park, represented that the money was a down payment from Taff to Myers, and allegedly had the agent fax a false closing statement to a mortgage company showing that the money was going to Myers.
Then, with Myers' consent, Taff took the $300,000 check back and returned the money to his campaign accounts, according to the indictment.
"You can't provide false information in a home-loan deal," said Jim Cross, a spokesman in U.S. Atty. Eric Melgren's office. "It becomes a federal issue when a fax machine is used to send false information across a state line for the purpose of defrauding a mortgage company."
Prosecutors also allege Taff listed his campaign accounts as his personal assets and falsely stated in the loan application that his monthly income was $15,000 instead of his actual monthly income of $6,500.
Cross said he couldn't discuss how the case came to light. It was investigated by the FBI.
Taff, a former fighter pilot viewed as a GOP moderate, lost to incumbent Democrat Dennis Moore in the 2002 general election. He mounted a second bid for the seat in 2004 and lost to conservative Kris Kobach in the Republican primary.
Attempts to reach Taff for comment Wednesday were unsuccessful. Myers, who is listed as a co-defendant in the wire-fraud charge, did not return a phone call to his home.
Taff likely will be issued a summons to appear in court instead of being arrested, Cross said. He faces up to 30 years in prison if convicted of wire fraud and up to five years in prison if convicted of misusing campaign funds.
"All I can say is that if these allegations are true, (Taff) has got some very serious problems," said Tim Shallenburger, chairman of the Kansas Republican Party and executive vice president at American Bank in Baxter Springs. "But as a banker, I have to say I think there may be a lot more of this kind of thing going on than we know. : We have people come in all the time who want to borrow money and who say 'Why do I have this much collateral, or put this much down? I have a friend. : he got a loan and he didn't have to do this. Why are you making me do this?'"
Shallenburger said he did not know Taff well but had no reason to think he was a "bad person."
A vice president of the mortgage company to which Taff allegedly submitted fraudulent information said the company was cooperating with authorities.
"If the allegations are true, we will do everything within the legal limits to ensure the protection of our shareholders' best interest," said Mike Enos of NovaStar Home Mortgage Inc. of Lake Forest, Calif., and Kansas City, Mo.
NovaStar is a one of the nation's largest wholesale lending companies. It specializes in nonconforming, single-family mortgage loans. Nonconforming loans are those rejected by conventional lenders because of size, credit shortfalls, or other circumstances.