Anthony J. DeMarco III, 33, Conshohocken, Pennsylvania, was sentenced to serve 25 years in prison for conspiracy and fraud charges in connection with a mortgage fraud scheme involving more than $30 million in loans.
Between 2006 and 2009, DeMarco owned and operated DeMarco REI Inc., a foreclosure rescue company. In addition to DeMarco, three others charged in the conspiracy pleaded guilty and were also sentenced.
Michael Richard Roberts, 30, of Swedesboro, New Jersey, was sentenced to 10 years in prison; Sean Ryan McBride, 38, Pittsburgh, Pennsylvania, was sentenced to 63 months in prison; and Eric Bascove, 39, Blue Bell, Pennsylvania, was sentenced to 41 months in prison. As previously reported by Mortgage Fraud Blog, DeMarco pleaded guilty March 20, 2012, to a 15-count indictment charging conspiracy, mail fraud, wire fraud, bank fraud, and money laundering. U.S. District Court Judge Michael M. Baylson presided over the sentencing hearings. Fines and restitution are pending.
DeMarco REI was headquartered in Philadelphia and employed Roberts and Bascove, among others. Roberts was the vice president of sales. DeMarco‘s business claimed to be able to assist homeowners facing imminent foreclosure. Between June and December 2008, the defendants would scour public records filings to find homeowners in financial distress and pitch a “sale-leaseback” arrangement to them. The pitch was that DeMarco REI would buy the homeowner’s house, the homeowner would remain in the house and pay rent to DeMarco REI, and when the homeowner got back on his or her feet financially, the homeowner could buy back the house.
The defendants solicited straw buyers for properties, used fraudulent documents to obtain mortgage loans from lenders, stole the sellers’ equity in the homes at closing, and eventually failed to make the monthly mortgage payments. DeMarco used the sellers’ equity to run his company and to pay lavish personal expenses. The houses went into foreclosure with the straw buyers listed on the mortgage, the original homeowners facing eviction from their homes, and the mortgage lenders stuck with loans in default.
Only one couple ever acquired the means to repurchase their home, but after they wired approximately $245,000 to DeMarco at his direction and for that purpose, DeMarco instead used their money to purchase a Ferrari for himself and jewelry for his girlfriend and to pay miscellaneous expenses.
McBride was a title agent and chief financial officer at Settlement Engine Inc., Pittsburgh. Settlement Engine closed approximately 30 loans for DeMarco REI from June 2008 to early December 2008. McBride pleaded guilty to conspiracy, wire fraud, and bank fraud; Roberts pleaded guilty to conspiracy, wire fraud, and bank fraud; Bascove pleaded guilty to conspiracy and bank fraud.
At the time of indictment, the U.S. Attorney’s Office for the Eastern District of Pennsylvania’s Civil Division filed a verified complaint and temporary restraining order to help the original homeowners save their homes. The complaint and temporary restraining order sought novel relief that would bring all the individuals and entities that have a stake in the homes before the court in an orderly process by which the damage caused by the defendants’ alleged fraud could be mitigated. In 2011, U.S. District Court Judge Michael Baylson approved conversion of the temporary restraining order into an injunction that stopped foreclosures and evictions that were related to the alleged fraud and that set forth the details of the mediation process. Currently, the majority of the banks and the original homeowners are still in the process of attempting to reach resolutions.
The case was investigated by the Pennsylvania Department of Banking, the FBI, and the U.S. Postal Inspection Service. The criminal case is being prosecuted by Assistant U.S. Attorney Karen L. Grigsby. The civil case is being handled by Assistant U.S. Attorney Stacey L. B. Smith.
The announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions, and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.