Archives For Washington D.C.

Scheme to Defraud Distressed Homeowners Gets Man Sentenced

Stephanie Abbott —  October 3, 2024 — Leave a comment

Terrylle Blackstone, 37, Woodbridge, Virginia, was sentenced today for participating in a conspiracy that fraudulently promised thousands of homeowners across the U.S. legal help in avoiding foreclosure. The scheme generated at least $15 million for the conspirators but never provided any legal services to the client-victims.

According to court documents, from January 2018 until February 2021, Blackstone worked with attorneys David Maresca of Virginia, Scott Marinelli of New Jersey, and Sam Babbs of Florida. The co-conspirators told homeowners that they operated a “national law firm” based in Washington, D.C.; that attorneys would review the homeowner’s file and provide legal representation to the homeowners; that an attorney in the homeowner’s local area would be assigned to assist them; that the homeowner could meet and consult with those attorneys about the case; and that attorneys in their law firm could help the homeowner, if necessary, file for bankruptcy.

From 2016 until 2019, the conspirators marketed Synergy Law with telephone, television, and internet advertising which told homeowners that attorneys at Maresca and Marinelli’s Synergy Law (Synergy) in Manassas could help them avoid foreclosure. During 2018 and 2019, bankruptcy judges, Synergy clients, and the U.S. Trustee’s Program raised concerns about Synergy’s practices in bankruptcy matters. Blackstone attended court hearings on behalf of Synergy where he made false statements to the court about the firm’s operations. In early 2019, Marinelli was incarcerated in Pennsylvania. Yet Blackstone, Maresca, Marinelli, and others continued to operate Synergy and collect monthly payments purportedly for legal services. During this time, there was no attorney who was a member of Synergy who could practice law. Synergy never had attorneys review all homeowner files and Synergy never had attorneys contact a client’s lender to discuss a mortgage resolution. They also continued to use the interstate wires to operate their “law firm” in ways that were essential to the scheme, such as soliciting clients by telephone.

From 2019 until at least 2022, the conspirators marketed another firm, Themis Law, with television and website advertising which told homeowners that attorneys with Themis could help them avoid foreclosure. Themis operated a call center at an office in Manassas, Virginia. Call center workers used scripts during their phone calls with homeowners in which Themis falsely promised that an attorney would review the homeowner’s case file; that this attorney knew their lender’s “internal guidelines” for a “mortgage resolution”; and that an assigned “legal team” would contact the homeowner’s lender to negotiate a resolution. Themis required homeowner-clients to pay an initial retainer amount followed by a monthly recurring amount for as long as the firm represented the homeowner. When Themis clients faced imminent foreclosure, Themis advised those clients to consider filing for bankruptcy to save their home and referred the clients to Babbs at the Babbs Law Firm. Those clients then signed a new retainer agreement and paid additional fees to Babbs.

During his dates of employment at Synergy Law and Themis Law, Blackstone received no less than $159,145.35 in direct payments from the companies. Judge Moss ordered that Blackstone pay a forfeiture money judgment in that amount.

The sentence was announced U.S. Attorney Matthew M. Graves, Special Agent in Charge David Geist of the FBI Washington Field Office Criminal and Cyber Division, and Special Agent in Charge Kareem Carter of the Internal Revenue Service – Criminal Investigation (IRS-CI) Washington, D.C. Field Office.

Blackstone pleaded guilty on June 6, 2024, to a count of conspiracy to commit mail fraud and wire fraud before U.S District Court Judge Randolph D. Moss. In addition to the prison term, Judge Moss ordered Blackstone to serve three years of supervised release and pay $159,145.35 in restitution.

This case was investigated by the FBI Washington Field Office and the Washington, D.C. Field Office of IRS-CI.

It is being prosecuted by Assistant United States Attorney John Borchert.

 

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Man Found Guilty in Scheme to Steal Residential Real Estate Using Fraudulent Deeds

Stephanie Abbott —  February 12, 2024 — Leave a comment

Jeffrey M. Young-Bey, 67, Washington, D.C was found guilty today on twelve federal charges stemming from a scheme in which he used a fake notary stamp, forged signatures, and fraudulent property deeds to steal residential real estate property. The scheme generated more than $850,000 in fraudulent loans obtained through mortgages taken out against the value of the stolen real estate.

According to the government’s evidence, beginning in November 2019, Young-Bey conspired to steal a residential townhome located in LeDroit Park in order to obtain mortgage financing against the stolen property. Specifically, Young-Bey identified a target property owned free and clear by an elderly homeowner located in the District. Young-Bey then prepared a fraudulent property deed, including forged signatures of the true owners and used a fake notary stamp to make the deed appear legitimate. Young-Bey filed the deed with the District of Columbia Recorder of Deeds, transferring the title from the true owners to a corporate entity. Young-Bey passed a check to the D.C. Recorder of Deeds to pay for the transfer taxes but put a stop payment order on the check before the D.C. government could cash the check.  Young-Bey caused the fake deed to be recorded with the D.C. Recorder of Deeds and then falsely told a mortgage services business that another individual had inherited the property and wanted to take a large loan against the value of the home. Young-Bey created a fake rental lease on Rocketlawyer.com and sent the lease to the mortgage company to convince them that his associate owned the home and rented the property for profit. The mortgage company was deceived into loaning Young-Bey’s associate approximately $360,000 against the value of the home they did not own, which was split evenly between the two. Young-Bey used his half of the proceeds to buy a BMW 3-Series valued at approximately $23,000.

After succeeding on the first scam, Young-Bey executed a second fraudulent scheme on a Shephard Park property in the District, forging the names of the two owners, using the fake notary stamp, and recording the deed at the D.C. Recorder of Deeds Office. Young-Bey again put a stop payment order on the transfer tax check before it could be cashed. Young-Bey used the recorded deed to obtain a construction loan in excess of $500,000 against the value of the house.  Young-Bey took a portion of the loan and purchased a BMW 7-Series worth approximately $120,000. He promptly sold the home to a legitimate real estate company for an additional $42,000 in profit. The fraud was discovered when the real estate company began performing renovations on the home and the rightful owners were alerted to the construction and demolition by their neighbors.

The jury verdict, in U.S. District Court for the District of Columbia, was announced by U.S. Attorney Matthew M. Graves and FBI Special Agent in Charge David J. Scott of the FBI Washington Field Office’s Criminal and Cyber Division.

Young-Bey was found guilty before the Honorable Colleen Kollar-Kotelly on one count of conspiracy to commit mail fraud and bank fraud, two counts of bank fraud, two counts of mail fraud, two counts of money laundering, and five counts of aggravated identity theft. A sentencing date is pending. Young-Bey’s conspiracy and fraud convictions carry a maximum sentence of 20 years in prison. The money laundering counts carry a maximum sentence of 10 years. The aggravated identity theft charges call for a mandatory sentence of two years in prison.

This case was investigated by the FBI’s Washington Field Office with assistance from the Metropolitan Police Department. It was prosecuted by Assistant U.S. Attorneys Christopher R. Howland and Kevin L. Rosenberg of the Fraud, Public Corruption, and Civil Rights Section with the assistance of Paralegal Specialist Gina Torres. Valuable assistance was provided by Assistant U.S. Attorney Joshua S. Rothstein, former Assistant U.S. Attorney Virginia Cheatham, former Special Assistant U.S. Attorney Viviana Vasiu, and Paralegal Specialist Lisa Abbe who investigated the case. The prosecution team was also assisted by Tonya Jones from the Victim Witness Assistance Unit and Assistant U.S. Attorney Daniel Lenerz from the Appellate Section.

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Man Pleads Guilty to Defrauding D.C. Mortgage Assistance& Foreclosure Prevention Program

Stephanie Abbott —  September 18, 2023 — Leave a comment

Maron Moss, Jr., 49, Miami, Florida, pleaded guilty today in Superior Court to one count of first-degree fraud for a scheme in which he stole more than $31,920 from the District of Columbia’s HomeSaver program, a foreclosure prevention program administered by the D.C. Housing Finance Agency and funded by the U.S. Department of Treasury.

            According to the government’s evidence, Moss, a former DC resident, applied for mortgage assistance for his Washington, D.C. home in 2018, and then submitted recertifications for continued program eligibility on six separate occasions between 2018 and 2019.  Moss represented that he was suffering from financial hardship, was unemployed, and that his only source of income was unemployment benefits. Based on these representations, the D.C. Housing Finance Agency made more than $31,920 in monthly mortgage payments directly to Moss’s mortgage service companies. But Moss was, in fact, employed when he applied for the program, as well as during the entire period that he recertified his program eligibility, earning approximately $239,743 in income from at least five different employers during the relevant 20-month period.

            The Honorable Heidi Pasichow accepted Moss’s guilty plea and scheduled sentencing for December 5, 2023. As part of the plea agreement, Moss agreed to pay full restitution.

U.S. Attorney Matthew M. Graves, Principal Deputy Inspector General Melissa Bruce, of the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), and Inspector General for the District of Columbia Daniel W. Lucas made the announcement.

            In announcing the guilty plea, U.S. Attorney Graves, Principal Deputy Inspector General Bruce, and Inspector General Lucas commended the work of those who investigated the case from SIGTARP and the Office of Inspector General.  They also acknowledged the efforts of Assistant U.S. Attorneys Benjamin D. Bleiberg and Brian P. Kelly who investigated and prosecuted the case.

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Duo Indicted on Federal Charges in Real Estate Scheme

Stephanie Abbott —  November 29, 2021 — Leave a comment

Jeffrey M. Young-Bey, 65, Washington, District of Columbia, and Martina Yolanda Jones, 44, Baltimore, Maryland, were indicted earlier this month for a scheme in which they allegedly used fraudulent property deeds to steal residential real estate property in the District of Columbia

As alleged in the indictment, beginning at least as early as November 2019, Young-Bey and Jones conspired to steal real estate and obtain a loan against the property or sell the property for profit. Specifically, the indictment states, Young-Bey identified a target property located in the District of Columbia. Young-Bey then prepared a fraudulent property deed, including forged signatures of the true owners.  Young-Bey filed the deed with the District of Columbia Recorder of Deeds, transferring the title from the true owners to a corporate entity controlled by Young-Bey or Jones.  The residential real estate property was then encumbered or sold through means of materially false and fraudulent pretenses, representations, and promises.

As a result of the scheme, the indictment alleges, Jones and Young-Bey obtained $323,224 from a fraudulent loan taken out on one property.

In addition, according to the indictment, Young-Bey received $268,036 from the sale of a second property in the District of Columbia that he allegedly stole and sold through the same scheme.  With these fraudulent proceeds, the indictment alleges, Young-Bey purchased a 2020 BMW 750XI worth over $106,000 and a 2016 BMW 328XI worth over $21,000.

All told, the indictment alleges, the scheme generated more than $500,000 in illegal proceeds.

In connection with Young-Bey’s activity, the Government has seized $269,239, as well as the 2020 BMW 750XI.

The announcement was made by U.S. Attorney Matthew M. Graves and Wayne A. Jacobs, Special Agent in Charge of the FBI Washington Field Office’s Criminal Division.

Young-Bey was arrested on November 22, 2021, and Jones was arrested on November 27, 2021. Both have made their initial appearances in the U.S. District Court for the District of Columbia.

Young-Bey was arrested on Nov. 22, 2021, and Jones was arrested on Nov. 27, 2021. Both have made their initial appearances in the U.S. District Court for the District of Columbia.

An indictment is merely a formal charge that a defendant has committed a violation of criminal law and is not evidence of guilt. Every defendant is presumed innocent until, and unless, proven guilty.

This case is being investigated by the FBI’s Washington Field Office.  It is being prosecuted by Assistant U.S. Attorney Joshua S. Rothstein and Special Assistant U.S. Attorney Viviana Vasiu, both from the Fraud Section of the U.S. Attorney’s Office for the District of Columbia.

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Judge Issues Arrest Warrant for Man Charged with Mortgage Fraud – The Washington Post

Stephanie Abbott —  January 3, 2020 — 2 Comments

Judge issues arrest warrant for Montgomery County man charged with mortgage fraud  – Patricia Duckett cries as she recounts how she lost her home of nearly 20 years, Nov. 6, 2019, in District Heights, Md. (Katherine Frey/The Washington Post) Patricia Duckett cries as she recounts how she lost her home of nearly 20 years, Nov. 6, 2019, in District Heights, Md. (Katherine Frey/The Washington Post) By Rachel Chason Jan. 3, 2020 at 9:51 a.m. PST A Prince George’s County Circuit Court judge issued an arres

Source: Judge issues arrest warrant for Montgomery County man charged with mortgage fraud – The Washington Post

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Universal American Mortgage Company, LLC Agrees to Pay to Settle for Failing to Follow FHA Rules

Stephanie Abbott —  October 23, 2018 — Leave a comment

Universal American Mortgage Company, LLC (UAMC) has agreed to pay the United States $13.2 million to resolve allegations that it violated the False Claims Act by falsely certifying that it complied with Federal Housing Administration (FHA) mortgage insurance requirements in connection with certain mortgages.  UAMC is a mortgage lender headquartered in Miami, Florida, doing business across the country, including in the Western District of Washington.

The United States alleged that between January 1, 2006, and December 31, 2011, UAMC knowingly submitted loans for FHA insurance that did not qualify.  The United States further alleged that UAMC improperly incentivized underwriters and knowingly failed to perform quality control reviews, which violated HUD requirements and contributed to UAMC’s submission of defective loans.

During the period covered by the settlement, UAMC participated as a direct endorsement lender (DEL) in the U.S Department of Housing and Urban Development’s (HUD’s) FHA insurance program.  A DEL has the authority to originate, underwrite and endorse mortgages for FHA insurance.  If a DEL approves a mortgage loan for FHA insurance and the loan later defaults, the holder of the loan may submit an insurance claim to HUD, FHA’s parent agency, for the losses resulting from the defaulted loan.  Under the DEL program, the FHA does not review a loan for compliance with FHA requirements before it is endorsed for FHA insurance.  DELs are therefore required to follow program rules designed to ensure that they are properly underwriting and certifying mortgages for FHA insurance and to maintain a quality control program that can prevent and correct deficiencies in their underwriting practices.

The announcement was made by U.S. Attorney Annette L. Hayes.

“Mortgage lenders may not ignore material FHA requirements designed to reduce the risk that borrowers will be unable to afford their homes and federal funds will be wasted,” said Assistant Attorney General Joseph H. Hunt for the Justice Department’s Civil Division.  “We will hold accountable entities that knowingly fail to follow important federal program requirements.”

“In a quest for profits, mortgage companies have ignored important lending standards” said U.S. Attorney for the Western District of Washington, Annette L. Hayes.  “Not only does this harm the borrowers leaving them over their heads in debt and underwater on their mortgages, it harms taxpayers because the mortgages are backed by government insurance.  This settlement should serve as a warning to other lenders to diligently follow the rules.”

United States Attorney Joseph Harrington for the Eastern District of Washington said, “FHA mortgages are vital to first-time homebuyers and to families whose credit and assets were damaged by the 2008 economic crisis.  FHA underwriting and other requirements are critical to safeguarding the integrity of the public money used to operate this important program.  We will continue to work with our law enforcement partners to ensure that mortgage lenders and others who profit from this program, while ignoring its rules, will be held accountable.”

“One of our principle responsibilities is to protect and ensure the integrity of federal housing programs for the benefit of all Americans,” said Jeremy M. Kirkland, Acting Deputy Inspector General, U.S. Department of Housing and Urban Development, Office of Inspector General.  “This settlement demonstrates our resolve and should signal to irresponsible lenders that this conduct will not be tolerated.”

“FHA depends upon the lenders we do business with to apply our standards and to truthfully certify that they’ve done so,” said David Woll, HUD’s Deputy General Counsel for Enforcement.  “Working with our federal partners, HUD will enforce these lending standards so we can protect families from preventable foreclosure and to protect FHA from unnecessary losses.”

The settlement resolves allegations originally brought by Kat Nguyen-Seligman, a former employee of a related UAMC entity, in a lawsuit filed under the whistleblower provisions of the False Claims Act, which allows private parties to bring suit on behalf of the federal government and to share in any recovery.  The whistleblower will receive $1,980,000 as her share of the federal government’s recovery in this case.

This matter was handled on behalf of the government by the Justice Department’s Civil Division, the U.S. Attorney’s Offices for the Eastern District of Washington and Western District of Washington, the Department of Housing and Urban Development, and the Department of Housing and Urban Development’s Office of the Inspector General.  case is captioned United States ex rel. Kat Nguyen-Selgiman v. Lennar Corporation, Universal American Mortgage Company, LLC, and Eagle Home Mortgage of California, Inc., 14-cv-1435 (W.D. Wash.).  The claims resolved by this settlement are allegations only, and there has been no admission of liability.

The settlement agreement is being handled by Assistant United States Attorney Kayla Stahman.

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Man Sentenced For Using Forged Deeds to Steal Homes

Stephanie Abbott —  October 19, 2018 — Leave a comment

Robert McCloud, 39, most recently of Warrenville, South Carolina, was sentenced today to 18 months in prison on a federal wire fraud charge stemming from a real estate scheme in which he and others used forged deeds and fake driver’s licenses to fraudulently transfer ownership of District of Columbia homes from the rightful owners.

According to the government’s evidence, McCloud and others identified vacant or seemingly abandoned residential properties in the District of Columbia, and then prepared and filed forged deeds with the District of Columbia’s Recorder of Deeds transferring the properties into fictitious names. Next, they agreed to sell these properties to legitimate purchasers and arranged with unsuspecting title and escrow companies to finalize the sale and transfer ownership. Finally, they shared the fraudulently-obtained sales proceeds amongst themselves.

In his guilty plea, McCloud admitted taking part in two such fraudulent transactions within a two-month period of 2015, which generated a total of $580,482 in proceeds.

In the first, in April 2015, McCloud filed a forged Intra-Family deed with the District of Columbia’s Recorder of Deeds purporting to show that a home in the unit block of K Street NW, Washington, D.C., was transferred from the true owners to a fictitious person.  The true owners, who owned the home outright without any mortgage liens, did not sign the deed and did not give anyone permission to transfer their home. McCloud then appeared at the title company pretending to be the owner in order to close the transaction, presenting a California driver’s license with his photograph but in the name of the fictitious person, signing the settlement documents and selling the property. The title company sent by wire transfer $195,527 to a bank account opened in the name of the fictitious person. McCloud withdrew approximately $43,000 of the funds before the crime was discovered; the rest of the funds were returned to the title company.

In the second transaction, in May 2015, a conspirator arranged for a forged deed with respect to another home, in the 6400 block of 16th Street NW, Washington D.C., to be filed with the Recorder of Deeds. As with the other property, the true owners, who owned the home outright without any mortgage liens, did not sign the deed and did not give anyone permission to sell the residence. In June 2015, McCloud appeared at the title company pretending to be the owner and using another fake California driver’s license with his photograph.  He again signed the settlement documents in the fictitious name. The title company sent by wire transfer $384,955 to a bank account opened in the name of the fictitious person. McCloud was arrested the following day.

The true owners of the homes, who are elderly, have faced difficult and lengthy proceedings in order to retitle the properties in their own names. Unwinding the fraudulent transfer is merely the first step for the victims to reclaim their ownership and interest in the properties and each must now settle various outstanding bills.

Although McCloud received $580,482 in proceeds from his wire fraud scheme regarding both real properties, law enforcement seized a total of $369,990, which was later administratively forfeited.  These forfeited funds, and the partial return of funds to the title company from the K Street transaction, reduced the amount owed in forfeiture to $57,965, which is the amount of the forfeiture money judgment.

McCloud pled guilty in June 2018, in the U.S. District Court for the District of Columbia. He was sentenced by the Honorable Amit P. Mehta. In addition to his prison term, McCloud must pay restitution in an amount to be set later by the Court, as well as a forfeiture money judgment of $57,965. Following his prison term, he will be placed on three years of supervised release, the first six months of which is to be spent in home confinement. McCloud also will be required to perform 150 hours of community service.

The announcement was made by U.S. Attorney Jessie K. Liu, Nancy McNamara, Assistant Director in Charge of the FBI’s Washington Field Office, and Peter Newsham, Chief of the Metropolitan Police Department (MPD).

In announcing the sentence, U.S. Attorney Liu, Assistant Director in Charge McNamara, and Chief Newsham commended the work performed by those who investigated the case from the FBI’s Washington Field Office and the Metropolitan Police Department. They acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office, including Assistant U.S. Attorneys Diane Lucas and Stephanie Miller, former Paralegal Specialist Christopher Toms, Paralegal Specialist Aisha Keys, and Litigation Technology Specialist Leif Hickling. Finally, they commended the work of Assistant U.S. Attorney Virginia Cheatham, who prosecuted the case.

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Defendant Obtained 24 Loans on Two Properties, Then Defaulted

Stephanie Abbott —  July 3, 2018 — Leave a comment

Garth Anthony Gardner, 49, a citizen of the Republic of Trinidad & Tobago, pled guilty yesterday to charges involving a scheme in which he made misrepresentations to apply for and obtain more than $3 million in multiple home equity line of credit loans.

According to the government’s evidence, in October 2003, Gardner purchased a property in the 5100 block of 13th Street NW, Washington, DC, using the Social Security number of another person and falsely representing himself as a U.S. citizen.  In May 2005, he used a corporation that he owned to purchase a second property in the 1300 block of Dexter Terrace SE, Washington, DC.  Gardner transferred ownership of the second property from the company to himself for $10.  Next, Gardner applied for a series of home equity line of credit loans using the two properties as collateral.

By settling these loans in close proximity to each other, Gardner minimized the banks’ ability to learn about the other loans.  From August to October 2004, Gardner obtained 12 home equity line of credit loans from 12 different banks secured by the 13th Street property, totaling approximately $1.4 million.  Between March and April 2006, Gardner applied for 13, and obtained 12, such loans from 12 banks, secured by the Dexter Terrace property, totaling approximately $1.9 million.

In approximately February 2008, Gardner stopped making payments and defaulted on all of the loans.  The banks discovered Gardner’s fraudulent conduct after initiating foreclosure proceedings on the properties.

Gardner admitted that he used a portion of the proceeds from the fraudulent scheme to purchase 15 silver bars, which the government recovered and liquidated for about $1.1 million.

Gardner was arrested in Frankfurt, Germany in May 2017, and was extradited to the District of Columbia in February 2018, to face the charges that had been pending since 2014.  He remains in custody pending his sentencing.

Gardner pled guilty on July 2, 2018, in the U.S. District Court for the District of Columbia, to two counts of bank fraud. Each charge carries a statutory maximum of 30 years in prison and potential financial penalties. Under federal sentencing guidelines, he faces an estimated range of 51 to 63 months in prison and a fine of up to $100,000. The plea agreement calls for him to pay $3,165,294 in restitution to 24 financial institutions. It also calls for him to pay a forfeiture money judgment in the amount of $2,048,446. The Honorable Christopher R. Cooper scheduled sentencing for Sept. 24, 2018.

The announcement was made by U.S. Attorney Jessie K. Liu and Acting Special Agent in Charge Kelly R. Jackson of the Internal Revenue Service Criminal Investigation (IRS-CI) Washington D.C. Field Office.

In announcing the plea, U.S. Attorney Liu and Acting Special Agent in Charge Jackson commended the work performed by those who investigated the case from the Internal Revenue Service-Criminal Investigation. They also expressed appreciation for the assistance provided by the Washington Field Office of the U.S. Secret Service and the Office of the Inspector General of the Social Security Administration. They acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office, including Assistant U.S. Attorneys Michelle Bradford, David A. Last, Diane Lucas and Denise A. Simmonds, and Paralegal Specialist Aisha Keys.

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Man Pleads Guilty to Using Forged Deeds to Steal Homes

Stephanie Abbott —  June 27, 2018 — Leave a comment

Robert McCloud, 39, Warrenville, South Carolina, pled guilty today to a federal wire fraud charge stemming from a real estate scheme in which he and others used forged deeds and fake driver’s licenses to fraudulently transfer ownership of District of Columbia homes from the rightful owners.

According to the government’s evidence, McCloud and others identified vacant or seemingly abandoned residential properties in the District of Columbia, and then prepared and filed forged deeds with the District of Columbia’s Recorder of Deeds transferring the properties into fictitious names. Next, they agreed to sell these properties to legitimate purchasers and arranged with unsuspecting title and escrow companies to finalize the sale and transfer ownership. Finally, they shared the fraudulently-obtained sales proceeds amongst themselves.

In his guilty plea, McCloud admitted taking part in two such fraudulent transactions within a two-month period of 2015, which generated a total of $580,482 in proceeds.

In the first, in April 2015, McCloud filed a forged Intra-Family deed with the District of Columbia’s Recorder of Deeds purporting to show that a home in the unit block of K Street NW, Washington, DC was transferred from the true owners to a fictitious person.  The true owners, who owned the home outright without any mortgage liens, did not sign the deed and did not give anyone permission to transfer their home. McCloud then appeared at the title company pretending to be the owner in order to close the transaction, presenting a California driver’s license with his photograph but in the name of the fictitious person, signing the settlement documents and selling the property. The title company sent by wire transfer $195,527 to a bank account opened in the name of the fictitious person. McCloud withdrew approximately $43,000 of the funds before the crime was discovered; the rest of the funds were returned to the title company.

In the second transaction, in May 2015, a conspirator arranged for a forged deed with respect to another home, in the 6400 block of 16th Street NW, Washington, DC, to be filed with the Recorder of Deeds. As with the other property, the true owners, who owned the home outright without any mortgage liens, did not sign the deed and did not give anyone permission to sell the residence. In June 2015, McCloud appeared at the title company pretending to be the owner and using another fake California driver’s license with his photograph.  He again signed the settlement documents in the fictitious name. The title company sent by wire transfer $384,955 to a bank account opened in the name of the fictitious person. McCloud was arrested the following day.

Although McCloud received $580,482 in proceeds from his wire fraud scheme regarding both real properties, law enforcement seized a total of $369,990, which was later administratively forfeited.  These forfeited funds, and the partial return of funds to the title company from the K Street transaction, reduced the amount owed in forfeiture to $57,965, which is the amount of the forfeiture money judgment.

The harm caused to the owners, buyers, and title companies was covered by title insurance; the restitution amount of $200,488 is the amount due and owing to the title insurance companies after giving credit to the forfeited funds, which were returned to the victims.

McCloud pled guilty in the U.S. District Court for the District of Columbia. The charge carries a statutory maximum of 20 years in prison and potential financial penalties. Under federal sentencing guidelines, McCloud faces a likely range of 27 to 33 months in prison and a fine of up to $60,000. He also has agreed to pay $200,488 in restitution to two title insurance companies, as well as a forfeiture money judgment of $57,965. The Honorable Amit P. Mehta scheduled sentencing for Oct. 19, 2018.

The announcement was made by U.S. Attorney Jessie K. Liu, Nancy McNamara, Assistant Director in Charge of the FBI’s Washington Field Office, and Peter Newsham, Chief of the Metropolitan Police Department (MPD).

In announcing the plea, U.S. Attorney Liu, Assistant Director in Charge McNamara, and Chief Newsham commended the work performed by those who investigated the case from the FBI’s Washington Field Office and the Metropolitan Police Department. They acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office, including Assistant U.S. Attorneys Diane Lucas and Stephanie Miller, former Paralegal Specialist Christopher Toms, Paralegal Specialist Aisha Keys, and Litigation Technology Specialist Leif Hickling. Finally, they commended the work of Assistant U.S. Attorney Virginia Cheatham, who is prosecuting the case.

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Nine Sentenced in DC Mortgage Fraud

Rachel Dollar —  September 8, 2015 — Leave a comment

Nine individuals were sentenced on federal charges stemming from a mortgage fraud scheme involving 45 properties and $16 million in mortgage loans used for the purchase of residential real estate in the District of Columbia and Maryland.

The sentencings occurred before the Honorable Reggie B. Walton of the U.S. District Court for the District of Columbia. Defendants include:

  • Edward Dacy, 77, West Melbourne, Florida. He was sentenced on August 6, 2015 to six years in prison. Dacy was found guilty by a jury of 10 counts of conspiracy, bank fraud, and mail fraud. Upon completion of his prison term, Dacy will be placed on three years of supervised release. In addition, Judge Walton ordered that he pay $2,730,345 in restitution and an identical amount as a forfeiture money judgment.
  • Frank Davis, Jr., 49, Washington, D.C. He was sentenced on August 7, 2015 to five years in prison for conspiracy to commit bank fraud. Upon completion of his prison term, Davis will be placed on three years of supervised release. Judge Walton also ordered that Davis pay $2,730,345 in restitution and an amount of $2,296,463 as a forfeiture money judgment;
  • Frederick Robinson, Sr., 52, Montgomery, Alabama. He was sentenced on July 31, 2015 to 27 months in prison for conspiracy to commit bank fraud. Upon completion of his prison term, Robinson will be placed on three years of supervised release. Robinson also was ordered to pay $925,311 in restitution and an amount of $971,900 as a forfeiture money judgment.
  • Lonnie Johnson, 47, Greensboro, North Carolina. He was sentenced on July 15, 2015 to one year and one day in prison for conspiracy to commit bank fraud. Upon completion of his prison term, Johnson will be placed on three years of supervised release. In addition, Judge Walton ordered that he pay $277,000 in restitution.
  • Cheryl E. Morrison, 54, West Melbourne, Florida. She was sentenced on Aug. 5, 2015 to five years of probation for conspiracy to commit mail fraud; she was required to serve 90 days of that time in home detention. She also must pay $42,600 in restitution;
  • Howard Tutman, III, 54, Woodstock, Maryland. He was sentenced on Aug. 4, 2015 to five years of probation for conspiracy to commit bank fraud; he was required to serve 20 weekends in jail. In addition, Judge Walton ordered Tutman to pay $484,370 in restitution and $606,414 in forfeiture;
  • Pauline Pilate, 50, Washington, D.C. She was sentenced on July 16, 2015 to three years of probation for conspiracy to commit bank fraud; she was required to serve eight weekends in jail. In addition, Judge Walton ordered that she pay $1 million in restitution and an identical amount as a forfeiture money judgment;
  • A. Conrad Austin, 49, Bowie, Maryland. He was sentenced on May 15, 2015 to five years of probation for conspiracy to commit bank fraud, mail fraud, and wire fraud; he was required to serve four weekends in jail. In addition, Judge Walton ordered that he pay $5,001 in restitution and an identical amount as a forfeiture money judgment.
  • Anthony Young, 47, Clinton, Maryland. He was sentenced today to five years of probation for conspiracy to commit bank fraud; he is required to serve eight weekends in jail. In addition, Judge Walton ordered that he pay $300,600 in restitution.

Davis and Robinson purchased properties in the names of general partnerships; Davis and Robinson then recruited individuals, or straw buyers, to re-purchase these same properties for higher amounts, funded by fraudulently obtained mortgage loans, by promising the buyers that they would not be required to: make financial contributions toward the purchase of the properties; pay the monthly mortgage payments or expenses; or maintain the properties. These mortgage loans were obtained by fraudulent statements and documents, including false loan applications and real estate contracts, phony cashier’s checks and verifications from banks, fabricated tax returns, and letters from a Certified Public Accountant.

Davis recruited Young, who assisted with recruiting other straw buyers; Pilate, who obtained her real estate license in order to create real estate sales contracts for the straw buyers, and Johnson, a bank employee who assisted in creating false verifications of deposits. In order to obtain mortgage loans in the names of some of the straw buyers, Robinson recruited Austin, a Certified Public Accountant (CPA), to create false CPA letters, inflated tax returns, and unjustified financial statements. Tutman was the loan officer on 14 loans or loan attempts, and knew that the borrowers were merely straw buyers for Davis and Robinson and the loan applications contained inflated salaries.

Morrison worked at the settlement company with Dacy, her husband. The settlement company received the funding from the mortgage lender and should have collected the buyers’ cash contributions; it was under the obligation to disburse the loan money only if all of the mortgage lender’s conditions were met and the buyer’s financial contributions collected. Morrison and Dacy handled the straw buyers’ settlement of the properties, with knowledge that the straw buyers did not pay the cash contribution as required by the lenders.

The sentencings conclude a three-year investigation relating to this mortgage fraud scheme involving the defrauding of banks, mortgage lenders, and the Federal Housing Administration, part of U.S. Department of Housing and Urban Development, of money by obtaining mortgage loans on residential real estate properties through false loan applications and documents and fraudulent settlements. These actions ultimately caused a loss to the banks, lenders, and FHA when mortgages were not paid. Some of the fraudulently-obtained mortgage loans were later resold in the secondary mortgage market to Freddie Mac and Fannie Mae.

“In this case, a group of greedy individuals teamed up with a real estate agent, a certified public accountant, employees of a settlement company, and others to carry out a far-reaching scheme that caused millions of dollars in losses to banks and other lending institutions,” said Acting U.S. Attorney Vincent H. Cohen, Jr. “These defendants took money that could have been used to help honest, hard-working people attain the dream of home ownership. They used straw buyers and falsified documents to carry out their long-running fraud. The prosecution in this case demonstrates our resolve to aggressively deal with those who engage in mortgage fraud at the expense of the entire community.”

“This was a multi-tiered scheme with multiple individuals playing a role, and every single one of them underestimated the ability and commitment of law enforcement to protect innocent victims and ultimately the taxpayers from mortgage fraud schemes,” said Olga Acevedo, Special Agent in Charge of the Mid-Atlantic Region, Office of the Inspector General, Federal Housing Finance Agency. “We are proud to be a part of the multi-agency effort to hold accountable those who engage in mortgage and bank fraud. FHFA-OIG will continue to carry out this work until all are held accountable.”

“This sentencing was the result of outstanding investigative work conducted by the HUD OIG, and our law enforcement partners,” said Cary Rubenstein, Special Agent in Charge of the Mid-Atlantic Region of the Office of the Inspector General of the U.S. Department of Housing and Urban Development (HUD-OIG). “This collaborative effort sends a clear message that we will commit the necessary resources to make sure that the fraudsters are brought to justice and are prosecuted to the full extent of the law.”

“Even though this $16 million mortgage fraud conspiracy targeted lenders, banks, and the Federal Housing Administration, the result of these criminal actions hurts our entire community,” said Andrew G. McCabe, Assistant Director in Charge of the FBI’s Washington Field Office. “The FBI will continue to work with our law enforcement partners to ensure that these criminal schemes do not go unpunished.”

In announcing the sentences, Acting U.S. Attorney Cohen, Special Agent in Charge Acevedo, Special Agent in Charge Rubenstein, and Assistant Director in Charge McCabe expressed appreciation for the work performed by the Special Agents and analysts from the Offices of Inspector General of the Federal Housing Finance Agency and Department of Housing and Urban Development and the FBI, who investigated the case. They also expressed appreciation for the work of the U.S. Secret Service and the Offices of Inspector General of the Central Intelligence Agency, the Department of Justice, and Department of Homeland Security, which assisted in the investigation. They acknowledged the efforts of those working on the case from the U.S. Attorney’s Office for the District of Columbia, including Paralegal Specialists Ida Anbarian, Donna Galindo, Corinne Kleinman, Kristy Penny, Tasha Harris, and Heather Sales, former Paralegal Specialist Sarah Reis, and Assistant U.S. Attorneys Anthony Saler, Thomas Swanton, and Arvind K. Lal, who assisted with forfeiture issues. Finally, they commended the work of Assistant U.S. Attorneys Virginia Cheatham and David A. Last, who tried the case against Edward Dacy and handled the plea negotiations with Conrad Austin, and Virginia Cheatham who prosecuted the case.

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