FOR FURTHER INFORMATION CONTACT
AUSA VICKIE E. LEDUC or
MARCIA MURPHY at 410-209-4885
July 1, 2011
FOR IMMEDIATE RELEASE
LEADER IN $78 MILLION “DREAM HOME” MORTGAGE FRAUD SCHEME SENTENCED TO 10 YEARS IN PRISON
Other Prosecutions by the Financial Fraud Enforcement Task Force Announced on the One Year Anniversary of “Operation Stolen Dreams” Targeting Mortgage Fraudsters
Greenbelt, Maryland - U.S. District Judge Roger W. Titus sentenced Michael Anthony Hickson, age 48, of Commack, New York, former chief financial officer of Metro Dream Homes (MDH), to 10 years in prison, followed by three years of supervised release, for a fraud conspiracy, 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. Hickson was also convicted of making a false statement in a federal court proceeding. Judge Titus also ordered that Hickson pay restitution in the full amount of the loss, with the exact amount to be determined at a later hearing.
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 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. The case was prosecuted by Assistant U.S. Attorneys Jonathan C. Su and Bryan E. Foreman.
“Maryland’s Mortgage Fraud Task Force is working to hold criminals accountable, recover illegal proceeds and deter future crimes,” said U.S. Attorney Rod J. Rosenstein. “Metro Dream Homes is one of our most egregious fraud prosecutions, but it is only one of many mortgage fraud cases we are pursuing.”
This case was just one of the significant matters prosecuted in the District of Maryland in the year since Operation Stolen Dreams was executed by the Financial Fraud Enforcement Task Force. Operation Stolen Dreams targeted mortgage fraudsters in the District of Maryland and throughout the country.
The President’s Financial Fraud Enforcement Task Force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit StopFraud.gov.
Participants in the Maryland Mortgage Task Force include:
Maryland Department of Labor, Licensing & Regulation
Maryland Office of the Attorney General
Maryland Insurance Administration
Maryland Department of Human Resources
Maryland State Police
Howard County Police Department
State’s Attorney’s Office for Baltimore City
State’s Attorney’s Office for Baltimore County
State’s Attorney’s Office for Montgomery County
State’s Attorney’s Office for Prince George’s County
State’s Attorney’s Office for Howard County
United States Attorney’s Office for the District of Maryland
Federal Bureau of Investigation
Inspector General, Social Security Administration
Inspector General, U.S. Department of Housing & Urban Development
Inspector General, U.S. Department of Veterans Affairs
Internal Revenue Service, Criminal Investigation Division
U.S. Postal Inspection Service
U.S. Secret Service
Securities and Exchange Commission
Federal Housing Finance Agency – Office of Inspector General
Assistant U.S. Attorney Jonathan Su is the Task Force coordinator for the U.S. Attorney’s Office, District of Maryland. Mr. Su is a member of a nationwide network of federal mortgage fraud prosecutors, and he maintains an email list that we use to relay information from the U.S. Department of Justice to members of the Maryland Mortgage Fraud Task Force.
Other significant matters in the District of Maryland in the year since Operation Stolen Dreams was executed include:
United States vs. Michael Anthony Hickson, Isaac Jerome Smith, and Alvita Karen Gunn, RWT-09-213
On February 18, 2011, a federal jury convicted Michael Anthony Hickson, Isaac Jerome Smith, and Alvita Karen Gunn of fraud conspiracy, wire fraud and conspiracy to commit money laundering in connection with their participation in a massive $78 million mortgage fraud scheme.
According to evidence presented at the six week trial, beginning in 2005, the defendants 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, the conspirators promised to 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. According to trial testimony, the defendants failed to advise investors that: the ATMs, flat-screen televisions and kiosks never generated any meaningful revenue; and the defendants used the funds from later investors to pay the mortgages of earlier investors. The defendants also failed to advise investors that their investments were being used for the personal enrichment of select MDH employees, including the defendants, 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. As a result of the scheme, more than 1,000 investors in the Dream Homes Program invested approximately $78 million. When the defendants stopped making the mortgage payments, the homeowners were left to attempt to make the mortgage payments MDH had promised to make in full.
Isaac Jerome Smith, age 48, of Spotsylvania, Virginia; and Alvita Karen Gunn, age 33, of Hanover, Maryland, were sentenced to 70 months and 60 months in prison, respectively.
United States vs. Deborah Williams, CCB-09-0094
On September 9, 2009, U.S. District Judge Catherine C. Blake sentenced Deborah Williams, of Pasadena, Maryland, the owner of a Severna Park title company, to 84 months in prison followed by two years of supervised release for mail fraud related to a scheme to divert settlement funds to her own benefit. Judge Blake issued an order of forfeiture of $3.443 million, the amount Williams stole.
Williams was the sole officer and director of Day Title, Inc., a title company with offices in Severna Park, Maryland, that conducted residential and commercial real estate closings and issued title insurance policies. From April 14, 2005 until May 8, 2008, Deborah Williams used for her own benefit settlement funds from real estate closings that were deposited in Day Title’s escrow account and were intended to pay off the lien holders on those properties. Williams attempted to conceal her illegal transactions by falsely representing on the settlement documents that her company had paid off lien holders, then sent the falsified settlement documents to the lender by commercial carrier. Investigators discovered over sixteen properties where Williams had not paid off the lien holder.
United States vs. Anthony Weis, CCB-10-394
On March 25, 2011, U.S. District Judge Catherine C. Blake sentenced Anthony V. Weis, age 45, of Phoenix, Maryland, to 78 months in prison followed by three years of supervised release for wire fraud in connection with a mortgage fraud scheme to defraud lenders of approximately $3.9 million in just eight months. Judge Blake ordered Weis to pay restitution of $4,007,705, which includes the loss to the title insurance company and the expenses of the individual victims.
Weis was the president and a shareholder of Maple Leaf Title LLC (MLT), a real estate title agency located in Towson, Maryland. Weis directed MLT employees in 13 real estate closings conducted between February and September 2009 to withhold the payoff checks from institutions that held the existing mortgage loan notes on the properties. In each instance, the settlement statement sent to the borrower’s lender falsely represented that the payoff was being made. In an effort to conceal the fraud scheme, Weis caused monthly mortgage payments to be made to the banks holding the mortgage notes. Believing that the bank had been paid off as a result of the settlement, the borrower stopped making monthly payments on that mortgage. Since that lender was receiving monthly payments, it had no reason to notify the borrower of any delinquency. However, because Weis was unable to send checks in every case where he had misappropriated the payoffs from escrow, a number of MLT clients received delinquency notices for non-payment of the mortgage note. A few were threatened with foreclosure and were forced to hire attorneys to prevent being ejected from their homes. Because the existing mortgages had not been paid off, the liens against the property were not removed and clear title could not be passed to the new lender and borrower. An insurance company had issued title insurance policies to the borrowers guaranteeing clear title. As a result of Weis’s criminal conduct, the title insurance company ultimately paid out $3.9 million to financial institutions that held mortgage notes.
United States vs. Stilianos (Stan) Mavroulis and Kyriakos (Kirk) Mavroulis, RDB-10-582
On September 16, 2010, a federal grand jury returned an indictment against Stilianos (Stan) Mavroulis and Kyriakos (Kirk) Mavroulis. According to the one count indictment, Stan Mavroulis was owner and president, and Kirk Mavroulis was vice president, of Fidelity Home Mortgage Corporation (FHMC), a mortgage lending company located in Baltimore. From 2007 to October 2008, the defendants allegedly conspired to defraud the Government National Mortgage Association (“GNMA” or “Ginnie Mae”) by diverting to their own benefit the proceeds of Federal Housing Administration (FHA) claims from mortgage loans that were due the GNMA. Specifically, the indictment alleges that the defendants received $1.3 million in FHA claim funds for at least 11 defaulted mortgage loans which were deposited in a FHMC clearing account between June and August 2008. The indictment alleges that the defendants failed to move the FHA claim funds within 48 hours, as required by GNMA regulations, from the FHMC clearing account to GNMA, which would have, in turn, used the funds to pay off the investors of mortgage backed securities. The defendants allegedly caused false reports to be made to GNMA which omitted the fact that FHA had paid out claims on defaulted loans and that FHMC had not paid over the proceeds as required. The defendants allegedly used the proceeds of the FHA claim funds for their own benefit, including the payment of legal fees. The matter is pending.
United States vs. John Stewart Morrison IV, RDB-10-0507
On December 22, 2010, John Stewart Morrison IV pleaded guilty to mail fraud, in connection with a real estate transaction for a property located in Glen Rock Borough, Pennsylvania. Morrison’s fraudulent omissions resulted in an individual, a retired firefighter, taking out a $400,000+ loan with SunTrust Mortgage to purchase the property that the firefighter otherwise would not have assumed. There were also material misrepresentations on the firefighter’s loan application that helped advance the fraud. Morrison will be sentenced on October 5, 2011.
United States vs. Darryl Stanley Paxton, DKC-10-427
On July 14, 2010, a federal grand jury returned an indictment against Darryl Stanley Paxton, charging him with wire fraud, fraudulent use of a social security number, and money laundering. The indictment alleged that, beginning in or about September 2005, and continuing through in or about August 2007, Paxton knowingly and intentionally devised a scheme and artifice to defraud various mortgage lenders by submitting loan application documents with materially false information (including fictitious names, social security numbers, employment, income, etc.) for the purpose of obtaining mortgage loans. Paxton pleaded guilty to these charges in the U.S. District Court for the Southern District of Florida and is awaiting sentencing.
United States vs. Douglas Skibicki, CCB-10-0151
On June 16, 2010, a federal grand jury returned a superseding indictment against Douglas Skibicki of Bethesda, Maryland, charging him with mail and wire fraud, aggravated identity theft and bankruptcy fraud, in connection with a mortgage fraud scheme in which he allegedly defrauded lenders, family and others of over $7.4 million. According to the 17 count superseding indictment, Skibicki was a mortgage originator and/or broker for a company which operated in Laurel, Maryland. From June 2005 through August 2009, Skibicki, with the assistance of an appraiser and others, allegedly participated in a scheme to defraud the victims of over $7.4 million through a series of real estate transactions. On January 6, 2011, Skibicki pleaded guilty and he is scheduled for sentencing on July 22, 2011.
United States vs. Wayne James Carter, RWT-10-458
On July 28, 2010, a federal grand jury returned an indictment against Wayne James Carter, charging him with wire fraud and mail fraud. The grand jury’s indictment alleges that beginning in April 2005 and continuing through February 2006, Carter obtained at least five mortgages by providing the various victim lenders with materially false information concerning his income, the existence of judgments against him, his involvement in multiple civil lawsuits, and his obligation to pay child support. The matter is pending.
United States vs. Rheena Bartolome and Robert Silver, WDQ-10-0486 and WDQ-10-640
On August 30, 2010, Rheena Bartolome and Robert Silver pleaded guilty to wire fraud and money laundering in connection with the purchase of four Baltimore properties. According to their plea agreements, Bartolome, Silver and a partner formed a company called Dream Day Real Estate Developers LLC to purchase “shell” properties in Maryland, rehab them into multi-family units, rent them out, collect rental income and eventually sell the properties at a profit. Silver would identify properties that were potentially profitable. Bartolome, a mortgage broker, would purchase the properties in her name because she had excellent credit and a good job. The partner and Silver formed a contracting company called Dream Day Contracting through which the partner could do the rehab work. Beginning in March 2005, Dream Day purchased five properties in Baltimore: 1926 McCulloh; 2302 McCulloh; 2306 McCulloh; 2308 McCulloh; and 41 S. Poppleton. Bartolome secured the mortgages and construction loans in her name and the partner performed the rehab work. During 2006, Silver stopped traveling to Baltimore and in his absence, the construction projects started to fall behind. Dream Day decided to sell the five properties because it was unable to secure tenants and receive rental income, making it difficult to pay the mortgages on time. The prospective buyer for four of the properties had virtually no cash assets from which to make the down payments. Bartolome and Silver knew that if the buyer disclosed her true salary and assets, the loans would not be approved. Accordingly, with Bartolome acting as the buyer’s mortgage broker, loan applications were submitted to the lenders which: overstated the buyer’s salary; failed to disclose that the buyer was purchasing all four properties at about the same time; falsely stated that each of the homes would be occupied by the buyer; and failed to disclose that Dream Day was making the down payments and providing cash to the partner and buyer after the loans closed. Between November 2007 and September 2008, all four properties went into foreclosure, resulting in a loss to the lenders totaling $1,162,500. The fifth property was sold in a separate arms-length transaction and is not in foreclosure. The defendants are awaiting sentencing.
United States vs. Winnie Barefoot, MJG-10-0460
On July 29, 2010, a federal grand jury returned an indictment against Winnie Barefoot, charging her with bank fraud, wire fraud, mail fraud, social security fraud, and false statements. According to the indictment, the defendant engaged in an extensive scheme to defraud multiple banks with respect to financing for three properties in Annapolis, Maryland. Specifically, the indictment alleges that the defendant submitted materially false information to mortgage lenders in order to obtain multiple mortgages. The matter is pending.
United States vs. Stephen Troese, Sr., James Kevin Hughes, and Brenda Lukenich, WMN-11-0029
On January 19, 2011, a federal grand jury returned an indictment against Troerse, Hughes, and Lukenich, charging them with mail fraud and wire fraud. The matter arises out of the operation of several related title companies – Troese Title Services; Troese/Hughes Title Services; and Troese/Prestige Title Services. The defendants are charged with diverting proceeds from later loan closings to make payments on earlier, still unpaid settlements in order to cover up the existence of a substantial shortfall in the companies’ escrow account. The alleged total loss to Chicago Title, the title insurer who supplied the policies sold to the Troese companies’ clients, is approximately $4 million. The matter is pending.
United States vs. Dema Daiga & Olu Campbell, 09-00628
On June 10, 2010 a federal jury convicted Dema Daiga of College Park, Maryland, and Olu Campbell, formerly known as Oluseun Oshosanya of Laurel, Maryland, of numerous counts of wire fraud. According to trial testimony, from August to December 16, 2008, Daiga and Campbell used two straw purchasers and the stolen identifiers of four other individuals to purchase six Baltimore properties - five of which quickly went into default, resulting in a loss to a Beltsville mortgage lending company of approximately $664,493. Daiga was also convicted of two counts of aggravated identity theft in connection with the scheme. According to trial testimony, Daiga worked as a mortgage loan broker and assisted with property appraisals, and Campbell also worked in the mortgage lending field. Campbell was sentenced to 54 months imprisonment on December 3, 2010 and Daiga was sentenced to 65 months imprisonment on April 11, 2011.
For further information about the Mortgage Fraud Task Force, including instructions about how to report mortgage fraud and details about criminal mortgage fraud prosecutions, please visit www.usdoj.gov/usao/md/Mortgage-Fraud/index.html.