More than 1,000 people have been defrauded out of a total of $70 million after getting involved in a massive mortgage fraud scheme operated by Metro Dream Homes, a company that promised to pay off the mortgages of people who invested a minimum of $50,000 in Metro Dream Homes and who agreed to allow the company to become a half owner in their home, The Washington Post reports (“Major Mortgage Fraud is Alleged,” April 28, 2009).

In exchange for homeowners’ investments, the company promised to pay off the mortgages of any investors enrolled in its Dream Homes Program within five to seven years using revenue generated from the company’s said-to-be-profitable side business ventures, including ATMs, electronic kiosks, and paid advertisements on flat-screen televisions.

Investors, some of whom learned of the program during presentations held at luxury hotels in Washington, D.C., and Beverly Hills, Calif., were never told that their investments were being used instead to pay for Metro Dream Homes executives’ salaries, some as high as $200,000 (“Five Charged in $70 Million ‘Dream Home’ Mortgage Fraud Scheme,” United States Attorney’s Office District of Maryland Press Release, April 27, 2009)

The company also used investor funds to pay for a fleet of chauffeured luxury cars for company employees as well as for executives’ trips to the 2007 Super Bowl and to the 2007 NBA all-star game. And in some cases, the company used the millions of dollars it received from new investors to make the mortgage payments of previous investors, according to the press release.

Five Face Fraud Scheme Charges

A federal grand jury has indicted four defendants in the fraud scheme and has brought a pending case against a fifth defendant. Charged in the case are Andrew Williams Jr., the founder and owner of Metro Dream Homes; Michael Hickson, chief financial officer; Isaac Smith, president; Alvita Gunn, vice president of operations; and Carole Nelson, chief financial officer of a related company.

“IRS Criminal Investigation takes allegations of mortgage fraud seriously,” said Eileen Mayer, head of the IRS’ criminal investigation division. “These types of crimes drive homeowners into foreclosure, erode the integrity of our tax system, and threaten the financial health of our communities.”

To combat the growing problem of mortgage fraud, federal, state, and local agencies have formed 18 mortgage fraud task forces.

Popularity: 8% [?]

No related posts.