Another Fraudster Sentenced in Dream Home Mortgage Scam
Carole Nelson, 53, Washington, D.C., was sentenced by U.S. District Judge Roger W. Titus sentenced to 29 months in prison followed by three years of supervised release for money laundering in connection with her 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. Judge Titus also entered an order requiring Nelson to pay restitution of $34,340,830.13.
As previously reported by Mortgage Fraud Blog, beginning in 2005, co-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, conspirators promised to make the homeowner's future monthly mortgage payments, and pay off the homeowner's 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 (MDH) 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.
In February 2006, the Dream Homes Program added a second program called "POS Dream Homes" that offered similar promises of paying off investor mortgages in five to seven years in exchange for an up-front investment of $50,000 or more. Collectively, these programs had offices in Maryland, the District of Columbia, Virginia, North Carolina, New York, Delaware, Florida, Georgia and California.
Nelson was hired in December 2006 at an annual salary of $200,000 to get investor contracts in order, including the creation of investor files. In March 2007, Nelson was named the chief financial officer of POS Dream Homes. At no time did Nelson see any evidence of revenue being generated from investments in ATMs and electronic billboards to pay off the investors' mortgages.
Nelson profited significantly during her time with Metro Dream Homes. For example, in May 2007, to document that she had a certain amount of assets in order to qualify for a home mortgage, Nelson and another conspirator agreed that Nelson would obtain a check from the company for $75,000 marked as an annual bonus. Nelson wrote herself a $75,000 check, drawn on the POS bank account, and deposited the check into her personal account. In fact, Nelson was not entitled to any bonus.
In May 2007, a related Metro Dream Homes company allocated $150,000 to Nelson and her spouse to open "Ambassador Dream Homes," which was supposed to be an affiliate of Metro Dream Homes. "Ambassador Dream Homes" did not commence operations prior to it being assumed by the receiver appointed by the Maryland state courts.
In July 2007, Nelson and a conspirator decided they wanted to purchase new Bentley automobiles costing $200,000 each. In order to qualify for financing, Nelson falsely represented in a vehicle financing application that she had been the chief financial officer of POS Dream Homes for 18 years and that her annual income was $700,000.
In all, during her 20 months of employment with MDH, Nelson received $413,075 in compensation.
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. In October 2007, the Circuit Court for Prince George's County, Maryland, granted the Commissioner's motion to freeze MDH assets, and appointed a receiver."
As a result of the scheme, more than 1,000 investors in the Dream Homes Program invested approximately $78 million. When Nelson's 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.
Nelson is the last defendant to be sentenced in this case. MDH's owner and founder Andrew Hamilton Williams, Jr., 61, Hollywood, Florida; chief financial officer Michael Anthony Hickson, 49, Commack, New York; president Isaac Jerome Smith, 49, Spotsylvania, Virginia; and vice president of operations Alvita Karen Gunn, 34, Hanover, Maryland, were all convicted by a federal jury of fraud conspiracy, wire fraud and/or 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 Williams to 150 years in prison, Hickson to 10 years in prison, Smith to 70 months in prison and Gunn to 60 months in prison.
The sentence 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; Acting Special Agent in Charge Eric C. Hylton 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.
"Mortgage fraud is every bit as corrosive to society as street crime," stated Eric Hylton, Acting Special Agent in Charge, IRS-Criminal Investigation, Washington D.C. Field Office. "This type of fraud has far-reaching economic consequences and severely thwarts recovery from the foreclosure crisis, leaving communities with inflated home values and financial institutions with uncollectible loans."
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.
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. Attorney Christen A. Sproule, who prosecuted the case.
source: Mortgage Fraud Blog