Lee Holliday Sentenced to 3 Years, 3 Months for $1.5 Million FHA Mortgage Fraud Scheme in Chicago

Case from 2025 (U.S. Attorney's Office release: Jan. 14, 2025). Published on Scammers.com Oct. 16, 2026; case status is current as of that date.

Lee Holliday, 66, of Schererville, Indiana, was sentenced Jan. 10, 2025, to three years and three months in federal prison for a mortgage fraud scheme involving homes on Chicago's West and South Sides that cost lenders about $1.53 million, the U.S. Attorney's Office for the Northern District of Illinois announced [1]. He pleaded guilty in 2024 to bank fraud and was sentenced by U.S. District Judge Sara L. Ellis.

How the scheme worked

The U.S. Attorney's Office says Holliday admitted the following in his plea agreement [1]:

1. Recruiting buyers. In 2011 and 2012, Holliday recruited buyers and gave them the down payment money. Because the loans were insured by the Federal Housing Administration, the down payments were only 3.5% of the price.
2. Inflated prices. The buyers bought homes at inflated prices. Holliday then split the proceeds with the buyers and the sellers.
3. False loan applications. Lenders received false and fraudulent loan applications. HUD-OIG said the applications misrepresented the borrowers' income and assets.
4. Broken promises of rental income. Holliday told buyers the properties would bring in rental income. The release says those promises proved false. Most buyers fell behind on their payments, and seven properties went into foreclosure.

Holliday also admitted getting $391,869 in Paycheck Protection Program loans in 2020 and 2021 that he was not entitled to [1].

The person sentenced

Lee Holliday, 66, Schererville, Ind. [1]

• Plea: guilty to bank fraud (2024).
• Sentence: 3 years and 3 months in federal prison, imposed Jan. 10, 2025.
• Investigation: HUD Office of Inspector General, with help from the FBI. Prosecuted by Assistant U.S. Attorney Stephanie C. Stern and former Assistant U.S. Attorney Charles W. Mulaney.

Red flags

• Someone offers to cover your down payment and promises the house will pay for itself with rent.
• You're asked to sign a loan application with income or assets you don't have. You are the borrower and remain liable for the loan.
• The deal includes a payout to you at or after closing.

What to do if you're targeted

1. Never sign loan documents that aren't true. Talk to a HUD-approved housing counselor at hud.gov.
2. Get an independent appraisal and inspection before buying.
3. Report mortgage fraud to the HUD OIG hotline at hudoig.gov or to the FBI at ic3.gov.

Case status (as of Oct. 16, 2026)

Defendant	Court	Status as of Oct. 16, 2026	Source
Lee Holliday, 66, Schererville, Ind.	N.D. Ill.	Pleaded guilty to bank fraud (2024); sentenced Jan. 10, 2025, to 3 years, 3 months in prison	[1]

Sources

1. U.S. Attorney's Office, Northern District of Illinois, "Man Sentenced to More Than Three Years in Prison for Orchestrating $1.5 Million Mortgage Fraud Scheme in Chicago," Jan. 14, 2025. https://www.justice.gov/usao-ndil/pr/man-sentenced-more-three-years-prison-orchestrating-15-million-mortgage-fraud-scheme

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