Adam P. Moellers, 35, Mason, Ohio, was sentenced to 36 months in prison and Gary P. Dailey, aka Gary Klump, 33, Covington, Kentucky, was sentenced to 21 months in prison in U.S. District Court for engaging in a foreclosure rescue scheme through a company called American Equity Group (AEG).
A third defendant, Perry Bensick, 37, Monroe, Ohio was sentenced on May 21 for his role in the scheme to a year and a day in prison. Each will be placed under court supervision for three years after their prison terms end.
AEG approached homeowners in financial distress with promises to find a buyer for their property who would let them stay there as renters until they were ready to buy it back. AEG convinced individuals to become investors by promising them they could buy a property with no money down, collect rent for a year or two then sell it back to the renter for a profit. AEG inflated the sale price, put together fraudulent loan applications, and took out extra cash at closing. The renters never purchased the properties back and the investors couldn’t afford to keep them.
“As a result, the properties went into foreclosure with even larger loan balances and with investors/borrowers who did not appreciate the risk that they had undertaken,” Assistant U.S. Attorney Timothy Mangan wrote in a court filing before Dailey’s sentencing.
The FBI calculated that in 2006 and 2007, the scheme caused losses of $6,849,460 to lenders. The defendants will be ordered to pay restitution in an amount to be determined by the court.
“The lenders were not the only victims,” Assistant U.S. Attorney Mangan told the court. “For the investors, they typically ended in bankruptcy or with ruined credit in exchange for a rescue plan by AEG that was doomed to fail.”
Moellers pleaded guilty on August 9, 2012 to one count of conspiracy. Dailey pleaded guilty on June 4, 2012 to one count of wire fraud. Besnick pleaded guilty on August 6, 2012 to one count of conspiracy.
Carter M. Stewart, United States Attorney for the Southern District of Ohio and Kevin Cornelius, Special Agent in Charge, Federal Bureau of Investigation, Cincinnati Field Division (FBI) announced the sentences imposed by U.S. District Judge Michael Barrett.
U.S. Attorney Stewart commended the investigation by the FBI and Assistant U.S. Attorney Mangan, who represented the United States in the case.