William Roosevelt Cloud, 62 of Charlotte, North Carolina, was sentenced in federal court in Charlotte to a total period of imprisonment of 27 years, to be followed by three years of supervised release. The sentence also requires Cloud to pay restitution. The sentencing follows Cloud’s convictions in federal court on October 22, 2007, following a two-week jury trial. Cloud was convicted of conspiracy related to his role in a large mortgage fraud scheme, dubbed by federal law enforcement as “Operation Clean Deed.” Cloud was also convicted on three counts of mail fraud, thirteen counts of bank fraud, one count of money laundering conspiracy, and six individual counts of money laundering.
As previously reported on Mortgage Fraud Blog, trial testimony showed that Cloud, and his co-defendants who were involved with him in the mortgage fraud conspiracy, executed a complex and far-reaching scheme resulting in hundreds of foreclosures in Mecklenburg and surrounding counties, and involving tens of millions of dollars in fraudulently obtained mortgage loans. In the scheme, Defendant Cloud and his fellow promoters usually would purchase and then flip sell homes, often the same day, generating tens of thousands of dollars with each fraudulent flip. In other cases, the promoters arranged for loan kickbacks from the builders directly.
According to evidence presented at trial, Defendant Cloud and his fellow promoters did not sell these homes on the open real estate market. Rather, they would recruit straw buyers to pretend to be true buyers for the home, selected on the basis of their good credit. Generally, the promoters and recruiters would promise such straw buyers that (a) they could buy an investment home with no money down; (b) they would receive assistance in order to rent out the home and later sell it at a profit; and (c) they would be repaid at or near the time of closing for their participation. However, as the evidence at trial showed, the straw buyers were left to fend for themselves after the promoters had obtained the fraudulent loans. Every house discussed at trial went into foreclosure. Not only were the promises to the straw buyers not kept, they had their credit ruined and were sometimes forced into bankruptcy.
The jury convictions of Defendant Cloud and a co-defendant, Juderita Russell (now deceased), followed the convictions by guilty plea of 19 additional “Operation Clean Deed” co-conspirators who were mentioned at the trial, and many of whom testified for the prosecution. The co-conspirators who were convicted included three attorneys, five mortgage brokers, an appraiser, four promoters, two builders, two recruiters, Defendant Cloud’s wife and fellow promoter, and one bank insider.
At the sentencing hearing, Judge Frank D. Whitney heard expert testimony about the collateral damage to neighborhoods from mortgage fraud schemes such as “Operation Clean Deed.” Judge Whitney found that over $9,000,000 of such collateral damage to the neighborhoods was foreseeable to Defendant Cloud, in addition to approximately $10,000,000 in intended losses from the conspiracy. The Court also heard statements from victims of the fraud in addition to the victim lending institutions – individuals who own homes in neighborhoods infected with houses foreclosed upon due to Cloud’s mortgage fraud-related activities.
Judge Whitney stated that he wished the sentence imposed on Cloud to convey “how horrendous mortgage fraud is as a crime,” in part because mortgage fraud “impacts our neighborhoods.” Judge Whitney noted that as a result of Cloud’s scheme and his “pervasive victimization,” “good neighborhoods lost some of their peace and tranquility.” Judge Whitney found that Cloud’s motive was “greed,” and he built his fraudulent transactions on a “series of falsehoods and lies.” Even as of the time of sentencing, the Court said it “did not hear any remorse” from Cloud. Judge Whitney noted that “if the sentence is a de facto life sentence, it is a just punishment.”
Cloud’s total sentence consists of 60 months imprisonment on Count One (Conspiracy to Commit Mortgage Fraud), 240 months imprisonment on Counts Two through Four (Mail Fraud), 324 months imprisonment on Counts Five through Twenty Six (Bank Fraud), 240 months on Count Twenty-Seven (Conspiracy to Commit Money Laundering), and 240 months on Counts Twenty- Eight through Thirty Three. The Court ordered that all sentences will be served concurrently. Defendant Cloud was taken into custody following his jury trial conviction in October 2007, and remains in custody now to begin serving his sentence.
U.S. Attorney Ryan is joined in making today’s announcement by Owen D. Harris, Special Agent in Charge of the Federal Bureau of Investigation (FBI) in North Carolina and Keith Fixel, Inspector-in-Charge of the U.S. Postal Inspection Service. The U.S. Attorney thanks the Office of the Inspector General, Department of Housing and Urban Development, for its assistance in preparing for the sentencing hearing.
The case was handled for the government by Assistant U.S. Attorneys Kurt Meyers and Craig Randall of the U.S. Attorney’s Office in Charlotte. The case was investigated by the Federal Bureau of Investigation and the United States Postal Inspection Service with assistance from the North Carolina Real Estate Commission, as well as the North Carolina Commissioner of Banks. Assistance from these State agencies was particularly important regarding the licensed professionals in the scheme — such as real estate agents, mortgage brokers, appraisers, and closing attorneys.