Judge Hands Down 30 Year Sentence to Leader of Mortgage Fraud Scam

Allison Tussey —  May 27, 2015 — Leave a comment

James Tyson, Jr., 34, Charlotte, North Carolina, was sentenced by Senior U.S. District Judge Graham C. Mullen to 30 years in prison, Carrie Tyson, 61, Winterville, North Carolina, was sentenced to 18 years in prison, Victoria Hunt, 36, Rockville, Maryland, received 8 years in prison, and Vonetta Tyson Barnes, 41, Mililani, Hawaii, 30 days in prison, for their roles in mortgage and investment fraud schemes codenamed “Operation Wax House”.

Each defendant was also sentenced to serve a term of three years supervised release.

Tyson, Jr., his mother, Carrie Tyson, and Victoria Hunt are three of the leaders of the Racketeering Influenced Corrupt Organization (RICO) (the “Enterprise”) which operated in Mecklenburg and Union Counties from approximately 2005 until the defendants were arrested in 2012. A fourth leader, Ramin Amini, remains a fugitive. The Enterprise was responsible for a
mortgage fraud and an investment fraud scheme that collectively defrauded victims of more than $75 million.

According to filed court documents, evidence presented at trials, and statements made in court proceedings, including during the hearings:

The Enterprise, led by the three defendants sentenced today, stole approximately $27 million from victims as part of its investment operations and approximately $48 million in loans from financial and lending institutions as part of its mortgage fraud operations.

In court, prosecutors described defendant Tyson, Jr. as the leader of the leaders, the most culpable person in the RICO Enterprise, and the most culpable of the 91 defendants charged as part of Operation Wax House. Tyson led the Enterprise in all aspects of its operations, including its investment fraud, its mortgage fraud, and its money laundering operations as well as a conspiracy to distribute marijuana. At the court hearing, prosecutors described Tyson, Jr. as the linchpin of the multiple interwoven illegal schemes carried out by the Enterprise.

The Enterprise defrauded $27 million from victims as part of its investment operations, using a series of sham corporations to steal from individual investor-victims. When the fraud associated with one sham corporation was discovered, the Enterprise would create another sham company with a different co-conspirator serving as the public front of the company, so that it
could continue to steal money from unsuspecting investor victims. As the leader, Tyson, Jr. was involved in creating and running each of the various sham companies used by the Enterprise to steal money from victims, and he was directly involved in stealing nearly $19 million from more than 60 individual victims.

When the Enterprise could not find victims who had money to invest, the conspirators induced individuals to become “credit” investors. In exchange for handing over their personal information and good credit to the Enterprise, the victims were falsely told that the loan payments would be made for them and they would receive investment returns. The Enterprise then took loans out in these victims’ names, kept the loan proceeds, and ultimately left the victims with thousands of dollars of debt.

In addition to the investment fraud scheme, Tyson, Jr. personally engaged in at least 18 different mortgage fraud transactions, resulting in loses to financial and lending institutions of more than $11 million. Tyson, Jr. received more than $2.3 million of the fraudulent proceeds from those mortgage fraud transactions, including more than $1.5 million of fraudulent proceeds from financial institutions.

Tyson, Jr. pleaded guilty to racketeering (RICO) conspiracy, securities fraud, mortgage fraud, wire fraud, money laundering conspiracy and bank bribery conspiracy. As part of the RICO conspiracy, Tyson Jr. pleaded guilty to the predicate act of conspiracy to distribute marijuana. Prosecutors noted that Tyson, Jr. arranged truckloads of marijuana from Texas and
elsewhere to be transported to North Carolina, distributing hundreds of pounds of marijuana.

Tyson, Jr. also admitted to paying bribes of $7,500 to $30,000 to a bank employee in exchange for bogus letters of credit that he and his co-conspirators tried to leverage to fraudulently induce other victims.

Judge Mullen described the defendant as the “apex of this pyramid of criminal activity.” Tyson, Jr. has been in custody since he was arrested on October 21, 2012, returning from Senegal, where he was operating the Enterprise’s last fraud company, PEI, a purported import-export business.

Carrie Tyson was also a leader of the Enterprise, and, in some instances, mentored the conspirators on how to operate the various schemes. For example, Carrie Tyson created and served as President of one of the first companies the Enterprise used to steal money from victims, “Brighton Developers,” falsely promising investor-victims that their investments were
secured by lots of land. When the terms of those investment contracts expired, Carrie Tyson wrote more than a million dollars in checks on an account which she knew had a negative balance. In total, Carrie Tyson was directly involved in defrauding at least 14 victims out of at least $1.3 million.

Carrie Tyson was also a leader of the Enterprise’s mortgage fraud operations, participating in at least five different mortgage fraud transactions, resulting in losses of more than $4 million. Carrie Tyson’s husband, James Tyson, Sr., was charged and previously sentenced to 37 months in prison for his role in the scheme. Carrie Tyson pleaded guilty to RICO conspiracy in November 2013.

Judge Mullen noted that Carrie Tyson was “among the worst” of the defendants. Carrie Tyson has been in custody since September 2013, when she was found to have been in violation of her conditions of release.

Victoria Hunt was the third leader of the Enterprise, who handled the Enterprise’s investment fraud and money laundering operations. Hunt served as Vice President and then CEO of “Sovereign Equity Group” and CEO of “Prestige Capital” and the “Elite Automotive” card dealership, which were used by the Enterprise to steal money from individual victims. Hunt targeted her friends and professional acquaintances to invest in the Enterprise’s sham businesses. In total, Hunt, working with Tyson, Jr., defrauded more than 60 victims of more than $19 million. Hunt also participated in the Enterprise’s mortgage fraud operations, providing down payment money for at least two transactions which resulted in losses of more than $2 million.

Hunt pleaded guilty to RICO conspiracy, securities fraud, mortgage fraud, wire fraud and money laundering conspiracy in January 2013. Following the sentencing hearing, Hunt was released on bond. She will be ordered to report to the Federal Bureau of Prisons upon designation of a federal facility.

Vonetta Tyson Barnes, Carrie Tyson’s daughter, was a promoter in the Enterprise’s investment fraud operations. She served as the President of “Sovereign Equity Group” after her brother, Tyson, Jr., stepped down. Barnes also created another sham company, “Inspiron Holdings,” used by the Enterprise to steal money from victims. In total, Barnes was involved in stealing nearly $900,000 from approximately 16 victims. She pleaded guilty in September 2013 to one count of RICO conspiracy. Following the sentencing hearing, Barnes was released on bond and will be ordered to report to the Federal Bureau of Prisons upon designation of a federal facility. All federal sentences are served without the possibility of parole.

Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina, announced the sentences.

These convictions are the latest in Operation Wax House, an investigation which began in 2007. Of the 91 individuals charged, 89 defendants have either pleaded guilty or have been convicted following trial. The two remaining defendants are international fugitives. Of the 89 defendants convicted, five remain to be sentenced in the coming months. Operation Wax House in the Western District of North Carolina is being handled by the Charlotte Division of the FBI and the Criminal Division of the IRS for the Financial Fraud Enforcement Task Force, along with the Securities Division of the North Carolina Secretary of State with respect to a separate prosecution. The Operation Wax House prosecution is being handled for the government by Assistant United States Attorney Maria K. Vento.

John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division and Thomas J. Holloman, III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI) join Acting U.S. Attorney Rose in making the announcement.

“As leaders of the racketeering conspiracy, James Tyson, Jr., Carrie Tyson and Victoria Hunt were single-handedly responsible for the financial hardships so many of their victims have suffered. In many instances, the victims knew and trusted the defendants, only to find themselves conned out of their money and left to deal with the devastating consequences of the fraud. Today’s lengthy sentences deliver a heavy dose of justice to the masterminds of a vast scheme that has been financially and psychologically devastating for so many individuals,” said Acting U.S. Attorney Rose.

“More than sixty people, from all walks of life, were cheated out of their hard earned money by those involved in these complex fraud schemes. Today’s sentencings represent the leaders of this vast racketeering enterprise which utilized mortgage fraud and high yield investment schemes to enrich themselves at a time our country was facing a tenuous economic future. The numerous convictions stemming from this long term investigation are proof of the FBI’s commitment toward holding accountable all those who put our nation’s economy at risk,” said John Strong, Special Agent in Charge of FBI Charlotte.

“The brazen, sustained criminal activity perpetrated by these defendants lasted for years, and demanded the attention of IRS Criminal Investigation and our law enforcement partners. While the short-term gains of a financial crime wave such as this may appear enticing, the necessary consequences reflected in today’s sentencings are now their long-term reality,” said Thomas J. Holloman III, Special Agent in Charge of IRS-CI.

Allison Tussey

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