Alexander Otis Matthews, 46, Dunn Loring, Virginia, a real estate businessman, pleaded guilty to fraud charges in connection with mortgage and investment schemes to obtain more than $12 million in fraudulent loans.
Matthews pleaded guilty before Judge Liam O’Grady in U.S. District Court in the Eastern District of Virginia to one count of bank fraud and one count of wire fraud. Matthews was charged with bank fraud on Nov. 17, 2010, in an
indictment filed in the District of Maryland and charged with wire fraud on February 17, 2011, in an indictment filed in the Eastern District of Virginia. Matthews‘ sentencing is scheduled for Sept. 30, 2011.
In his guilty plea, Matthews admitted that between November 2005 and May 2011, he orchestrated at least three mortgage fraud schemes in which he used “straw borrowers” with good credit scores to apply for and obtain nearly $11.5 million in fraudulent loans relating to three Northern Virginia residential properties. Matthews did so by causing lenders to receive false and inflated income information about the straw borrowers, and Matthews submitted forged and fraudulent documentation to lenders purporting to verify that false information. After attempting to refinance the loans and forestall foreclosure, Matthews ultimately defaulted on the loans for each of the three properties.
Matthews also admitted in his plea that between June 2008 and October 2010, he engaged in a fourth, related scheme to obtain more than $800,000 in fraudulent loans from at least eight residents of Maryland and Virginia. Matthews obtained the loans by promising those individuals high rates of return over short periods of time in exchange for money that Matthews claimed he would invest in various property ventures. Matthews later defaulted on each of those loans, generally paying back no more than 10 percent of the borrowed amounts.
According to court documents, Matthews perpetrated his schemes through various purported real estate entities, including American Investments Real Estate Corporation (AIREC), AIREC Realty, Kibra Construction, Ezana Corporation and Farmville Group LLC.
At sentencing, Matthews faces a maximum penalty of 30 years in prison on the bank fraud count and 20 years in prison on the wire fraud count. For each count, Matthews also faces a fine of the greater of $250,000 or twice the value gained or lost from the scheme. In his plea, Matthews agreed to forfeiture of $7.9 million and restitution of approximately $5.3 million.
The guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Neil H. MacBride of the Eastern District of Virginia, U.S. Attorney Rod J. Rosenstein of the District of Maryland, Assistant Director James W. McJunkin and Special Agent in Charge Richard McFeely of the FBI.
The case is being prosecuted by Trial Attorneys Ryan S. Faulconer and Peter A. Frandsen of the Criminal Division’s Fraud Section, as well as Assistant U.S. Attorneys Raymond E. Patricco Jr. and Jack Hanly for the Eastern District of Virginia and Assistant U.S. Attorney Michael J. Leotta for the District of Maryland. The case is being investigated by the FBI’s Washington and Baltimore Field Offices, with substantial assistance from the Montgomery County, Md., State’s Attorney’s Office and the Alexandria, Va., Office of the U.S. Trustee.