Andrew Hamilton Williams, Jr., 60, Hollywood, Florida, was convicted by a federal jury of wire fraud and conspiracy to commit money laundering in connection with his participation in a massive mortgage fraud scheme which promised to pay off homeowners’ mortgages on their “Dream Homes,” but left them to fend for themselves.
According to evidence presented at the two week trial, beginning in 2005, Williams and his conspirators targeted homeowners and home purchasers to participate in a purported mortgage payment program called the “Dream Homes Program.” In exchange for a minimum of $50,000 initial investment and an “administrative fee” of up to $5,000, the conspirators promised to make the homeowners’ future monthly mortgage payments, and pay off the homeowners’ mortgage within five to seven years.
Dream Homes Program representatives explained to investors that the homeowners’ initial investments would be used to fund investments in automated teller machines (ATMs), flat screen televisions that would show paid business advertisements, and electronic kiosks that sold goods and services. To give investors the impression that the Dream Homes Program was very successful, Metro Dream Homes spent hundreds of thousands of dollars making presentations at luxury hotels such as the Washington Plaza Hotel in Washington, D.C., the Marriott Marquis Hotel in New York, New York, and the Regent Beverly Wilshire Hotel in Beverly Hills, California. Metro Dream Homes had offices in Maryland, the District of Columbia, Virginia, North Carolina, New York, Delaware, Florida, Georgia and California.
According to trial testimony, Williams and his co-conspirators failed to advise investors that the ATMs, flat-screen televisions and kiosks never generated any meaningful revenue. The defendants used the funds from later investors to pay the mortgages of earlier investors. Evidence showed that MDH had not filed any federal income tax returns throughout its existence. The defendants also failed to advise investors that their investments were being used for the personal enrichment of select MDH employees, including Williams, to: pay salaries of up to $200,000 a year as well as their mortgages; employ a staff of chauffeurs and maintain a fleet of luxury cars; and travel to and attend the 2007 National Basketball Association All-Star game and the 2007 National Football League Super Bowl, staying in luxury accommodations in both instances. Nor were investors told that investor funds were used to: pay off investors in a prior failed ATM investment venture called Bankcard Group; make multiple donations of up to $50,000 each to charitable organizations to give MDH the appearance of being financially successful; and transfer millions of dollars in investor funds to third-party businesses for purposes not disclosed to investors.
Trial testimony showed that Williams and his co-conspirators arranged for early Dream Homes Program investors, whose monthly mortgage payments had been paid by MDH using the funds of later Dream Homes Program investors, to attend recruitment meetings to assure potential investors that the Dream Homes Program was not a fraud. MDH used a third party company to pay investors to advertise the Dream Homes Program to friends and family. MDH encouraged homeowners to refinance existing mortgages on their homes in order to withdraw equity and generate the funds necessary to enroll their homes in the Dream Homes Program.
On August 15, 2007, the Maryland Securities Commissioner issued a cease-and-desist order to MDH and other related companies directing them to immediately cease the offering and sale of unregistered securities in connection with their promotion of the Dream Homes Program. However, Williams thereafter called meetings in which investors were told that MDH was earning up to $10 million in one month and that the company’s legal difficulties were the result of either misunderstandings or racial animus against company leaders.
As a result of the scheme, more than 1,000 investors in the Dream Homes Program invested approximately $78 million. When Williams and his co-conspirators stopped making the mortgage payments, the homeowners were left to attempt to make the mortgage payments MDH had promised to make in full.
Williams faces a maximum sentence of 30 years in prison for the fraud conspiracy; 30 years in prison on each of the 15 counts of wire fraud; and 20 years in prison for conspiracy to commit money laundering. U.S. District Judge Roger W. Titus scheduled sentencing for March 30, 2012 at 9:00 a.m.
Michael Anthony Hickson, 48, Commack, New York, the chief financial officer of MDH; Isaac Jerome Smith, 48, Spotsylvania, Virginia, the president of MDH; and Alvita Karen Gunn, 33, Hanover, Maryland, vice president of operations, were convicted by a federal jury of fraud conspiracy, wire fraud and conspiracy to commit money laundering in connection with their participation in the mortgage fraud scheme. Hickson was also convicted of making a false statement in a federal court proceeding. Judge Titus sentenced Hickson to 120 months in prison, Smith to 70 months in prison and Gunn to 60 months in prison.
Carole Nelson, 52, Washington, D.C., the chief financial officer of POS Dream Homes, previously pleaded guilty to money laundering, and Charlotte Melissa Josephine Hardmon, 39, Bowie, Maryland, pleaded guilty to conspiracy to commit wire fraud in connection with their participation in this scheme. Their sentencing dates are pending.
This prosecution is being brought jointly by the Maryland and Washington, D.C. Mortgage Fraud Task Forces, which are comprised of federal, state and local law enforcement agencies in Maryland, Washington, D.C. and Northern Virginia. The Task Forces were formed to promote the early detection, identification, prevention and prosecution of various kinds of mortgage fraud schemes. This case, as well as other cases brought by members of the Task Forces, demonstrates the commitment of law enforcement agencies to protect consumers from fraud and help to ensure the integrity of the mortgage market and other credit markets. Information about mortgage fraud prosecutions is available on the internet at http://www.usdoj.gov/usao/md/Mortgage-Fraud/index.html.
The conviction was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation; Special Agent in Charge Jeannine A. Hammett of the Internal Revenue Service – Criminal Investigation, Washington, D.C. Field Office; Maryland Attorney General Douglas F. Gansler; and Inspector General Jon T. Rymer of the Federal Deposit Insurance Corporation.
U.S. Attorney Rod J. Rosenstein said, “Metro Dream Homes was an egregious fraud scheme, and an excellent example of the principle that financial schemes that sound too good to be true are usually scams.”
“This case shows that the appearance of success can be a mask for a tangled financial web of lies,” said IRS Special Agent in Charge Jeannine Hammett. “Ponzi schemes can thrive for a time on false claims about how the money is being invested and where the returns are coming from. But that time is gone, and as this verdict shows, it’s time for those responsible to face judgment.”
United States Attorney Rod J. Rosenstein praised the FBI, the IRS – Criminal Investigation, the Maryland Attorney General’s Office – Securities Division and the Federal Deposit Insurance Corporation – Office of Inspector General for their investigative work. Mr. Rosenstein thanked Assistant U.S. Attorneys for the District of Maryland Jonathan C. Su and Christen A. Sproule, who prosecuted the case.