Friday, June 20, 2008

4 Indicted In Maryland Mortgage Fraud Scheme

Michael K. Lewis, 56, Cheryl Brooke, 51, both of Upper Marlboro, Maryland, Lewis‘ brother Earnest Lewis, 59, Takoma Park, Maryland and Winston Thomas, 42, New Carrollton, Maryland have been indicted for conspiracy to commit wire fraud and wire fraud in connection with a scheme in which they offered to help financially-vulnerable individuals save their homes from foreclosure, and instead defrauded homeowners and mortgage lenders. The indictment also charges Michael K. Lewis and Brooke with bankruptcy fraud in connection with the scheme.  The indictment was returned on June 11, 2008 and unsealed upon the arrest of the defendants.

According to the twelve-count indictment, from the Fall of 2004 until May 2008, Lewis aired television advertisements that targeted financially-vulnerable individuals, representing that he could improve their credit, save their homes from foreclosure and assist them with bankruptcy.  Viewers who called the toll-free number were solicited by Michael K. Lewis and others to become MKL Associates and purchase a variety of for-fee services, such as the Michael K. Lewis Financial Diet (the MKL financial diet) for reducing debt, as well as a pre-paid legal plan, income tax return preparation services, and bankruptcy petition preparation.

The indictment alleges that Michael Lewis and the co-conspirators specifically targeted individuals who owned and had equity in their homes, but were facing default or foreclosure on their homes. The defendants fraudulently represented to the homeowners that their “lease/buy-back program” would help the homeowners to keep their homes.  The homeowners were told that Earnest Lewis‘ good credit would be used to temporarily refinance their homes, and that they could repurchase the homes in roughly one year, or once they regained their financial footing.  The homeowners were induced by the co-conspirators into signing documents related to the sale and lease of their homes. In order to carry out the scheme, Brooke would file bankruptcy documents in the name of the homeowners to delay the foreclosure of the homes.  In addition, in order for Earnest Lewis to obtain mortgage loans to purchase the homes, Thomas and Earnest Lewis submitted false financial and employment information to mortgage lenders.  After Earnest Lewis obtained financing to purchase the properties, Brooke would file motions to dismiss the homeowners’ bankruptcy cases so that the settlements could take place.

The indictment further alleges that, after the sales of the homes, several homeowners were told that they could remain in their homes by paying “rent” to Earnest Lewis, which was often higher than the homeowner’s mortgage payment had been.  The “rent” and other MKL Associate fees were deposited into a bank account belonging to In the House Technologies, a company affiliated with Michael K. Lewis and Cheryl Brooke.  In addition, Michael K. Lewis and Thomas, then a senior loan officer at a mortgage company, allegedly prevented homeowners from receiving at settlement the checks that represented the money due from the sales of their homes.  Thomas picked up the checks, and the co-conspirators induced the homeowners into signing over the checks to ”In the House Technologies.” When confronted by the homeowners as to why they were getting less money than anticipated from the sales of the homes, Michael K. Lewis allegedly made false and misleading statements to the homeowners, including that the fees and expenses associated with settlements were higher than anticipated and that money would be put into escrow accounts for the homeowners. Instead, the indictment alleges, the defendants distributed the proceeds amongst themselves.  Ultimately, the defendants stopped paying the mortgages on the homeowners’ properties, which caused them to go into default.

The indictment seeks forfeiture of $2,915,600, including funds and property contained in accounts in the names of the defendants and entities associated with or controlled by them.

“The mortgage fraud conspiracy cases that we are prosecuting in Maryland should serve both to hold criminals accountable and to warn homeowners about the many smooth-talking con artists who take advantage of people who fall behind on their mortgage payments,” said United States Attorney for the District of Maryland Rod J. Rosenstein. “No matter how bad your financial situation may seem, signing your house over to a con artist will make it worse.”

The defendants all face a maximum sentence of 20 years in prison and a $250,000 fine for the conspiracy and each of the nine mail fraud counts. Michael K. Lewis and Brooke also face a maximum sentence of 5 years in prison and a fine of $250,000 for bankruptcy fraud. 

An indictment is not a finding of guilt.  An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceedings. 

United States Attorney Rod J. Rosenstein thanked the U.S. Postal Inspection Service, the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation for their investigative work.  Mr. Rosenstein commended Assistant United States Attorneys Gina L. Simms and Stacy Dawson Belf, who are prosecuting the case.

mortgage fraud

1. There is not enough room in prison to hold all the criminals guilty of mortgage crimes, but they should all be imprisoned nonetheless. They should be made to provide restitution to all the victims and perform some type of community service. They should also be barred from ever attaining any type of employment involving the control of financial matters.  Let the arrests continue until all of them are found and prosecuted.

   Posted by  on  06/20  at  02:50 PM

2. Done right people can save thier home with similar process.  But there are always those that try to scam the innocent.  And it puts those companies that offer similar servies in an honest and correct process in a bad light.  Throw away the key!

   Posted by  on  07/10  at  04:59 AM