Brian McCloskey, 44, Baltimore, Maryland, pleaded guilty to conspiring to commit wire fraud arising from an investment fraud scheme.
According to his plea agreement, McCloskey was a home builder and the registered agent and owner of several Maryland corporations, including, The McCloskey Group, LLC, 1100 Columbia York PA LLC, Claires Lane, LLC, and Kellen Property & Investment LLC. From at least August 2009 to August 2011, McCloskey and a co-conspirator also in the home building business, targeted individuals seeking investment opportunities or commercial real estate development lending, including a Bowie, Maryland hotel project.
As previously reported by Mortgage Fraud Blog, victim investors were instructed that in order to obtain loans for commercial real estate projects, and in exchange for a high rate of return, the purported lenders required that large sums of money be deposited in an escrow bank account to show “liquidity,” and that co-conspirator Kevin Sniffen was the only attorney assigned as escrow agent.
McCloskey admitted that he, Sniffen, and their co-conspirators defrauded investors by fraudulently removing the escrowed funds. Typically within one or two weeks after the deposit by the investor, McCloskey, Sniffen, and their co-conspirators withdrew the victim’s funds from the escrow accounts to pay the co-conspirators’ business and personal debts or to make “lulling” payments to other victim investors.
McCloskey, Sniffen, and their co-conspirators attempted to cover up the fraud by: issuing false verifications of deposits and false bank statements regarding the amount of escrowed funds; falsely representing in e-mails and by phone the balance of escrow funds and the date when the investors’ money would be returned; and returning part of the victim’s investment using funds fraudulently obtained from other investors.
McCloskey and his co-conspirators improperly obtained funds from investor victims in excess of $14 million.
McCloskey faces a maximum sentence of 20 years in prison and a fine of $250,000 or twice the value of the gain or loss. U.S. District Judge James K. Bredar scheduled sentencing for August 21, 2012, at 10:00 a.m.
Kevin Sniffen, 50, Phoenix, Maryland, an attorney licensed in Maryland, pleaded guilty to the same charge and is scheduled to be sentencing on June 4, 2012 at 2:00 p.m.
The plea agreement was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation; and Acting Special Agent in Charge Eric C. Hylton of the Internal Revenue Service-Criminal Investigation, Washington, D.C. Field Office.
This law enforcement action is part of President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
United States Attorney Rod J. Rosenstein thanked the FBI and IRS-CI for their work in the investigation. Mr. Rosenstein praised Assistant U.S. Attorneys Sean O’Connell and Sujit Raman, who are prosecuting the case.