Maryland Attorney Pleads Guilty in $14 Million Construction Investment Scheme
Baltimore, Maryland - Kevin Sniffen, age 50, of Phoenix, Maryland, an attorney licensed in Maryland, pleaded guilty today to conspiring to commit wire fraud arising from an investment fraud scheme.
The plea agreement 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; and Acting Special Agent in Charge Eric C. Hylton of the Internal Revenue Service - Criminal Investigation, Washington, D.C. Field Office.
"People should seek independent advice before investing their money," said U.S. Attorney Rod J. Rosenstein.
"Promoters of investment fraud schemes like this one prey upon trusting investors and then steal their hard earned money,” said IRS Special Agent in Charge Eric Hylton. "IRS Criminal Investigation is committed to investigating these schemes in an effort to protect the financial well being of the American public.”
According to his plea agreement, Sniffen’s co-conspirators targeted individuals seeking investment opportunities or commercial real estate development lending in Maryland and elsewhere, including a Bowie, Maryland hotel project. Victim investors were instructed that in order to obtain loans for commercial real estate projects, and in exchange for a high rate of return, the purported lenders required that large sums of money be deposited in an escrow bank account to show “liquidity,” and that Sniffen was the only attorney assigned as escrow agent. All of the escrow agreements used to defraud the lender-investors provided that no person other than the victims had the ability to remove the escrowed funds without the victims’ permission.
From at least August 2009 to August 2011, Sniffen and his co-conspirators defrauded investors by fraudulently removing the escrowed funds. Typically within one or two weeks after the deposit by the investor, Sniffen and his co-conspirators withdrew the victim’s funds from the escrow accounts to pay the co-conspirators’ business and personal debts or to make “lulling” payments to other victim investors.
Sniffen and his co-conspirators attempted to cover up the fraud by: issuing false verifications of deposits and false bank statements regarding the amount of escrowed funds; falsely representing in emails and by phone the balance of escrow funds and the date when the investors’ money would be returned; and returning part of the victim’s investment using funds fraudulently obtained from other investors.
Sniffen and his co-conspirators improperly obtained funds from investor victims in excess of $14 million.
Sniffen faces a maximum sentence of 20 years in prison and a fine of $250,000 or twice the value of the gain or loss. U.S. District Judge James K. Bredar scheduled sentencing for June 4, 2012, at 2:00 p.m.
This law enforcement action is part of President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The 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.
United States Attorney Rod J. Rosenstein thanked the FBI and IRS - CI for their work in the investigation. Mr. Rosenstein praised Assistant U.S. Attorneys Sean O’Connell and Sujit Raman, who are prosecuting the case.