Senior Loan Officer Sentenced in Mortgage Fraud Scheme That Targeted Victims Through Local TV Ads
Greenbelt, Maryland - U.S. District Judge Deborah K. Chasanow sentenced Winston Thomas, age 43, of New Carrollton, Maryland today to 37 months in prison, followed by three years of supervised release, for failure to file federal tax returns and for conspiracy to commit wire fraud in connection with a scheme in which he and his conspirators offered to help financially vulnerable individuals save their homes from foreclosure, and instead defrauded homeowners and mortgage lenders, announced United States Attorney for the District of Maryland Rod J. Rosenstein. Judge Chasanow also ordered Thomas to pay the IRS $58,418 and entered a forfeiture judgement against Thomas of $2,228,878, generated as proceeds of the criminal activity in the mortgage fraud scheme.
“Winston Thomas stole the homeowners’ equity by inducing financially-vulnerable homeowners to sell their properties and convert the sale proceeds to the use of the conspirators,” said U.S. Attorney Rod J. Rosenstein. “The mortgage fraud conspiracy cases that we are prosecuting in Maryland should serve both to hold criminals accountable and to warn homeowners about the many smooth-talking con artists who take advantage of people who fall behind on their mortgage payments.”
“The majority of American taxpayers file timely, accurate tax returns,” stated C. Andre' Martin, Internal Revenue Service-Criminal Investigation Special Agent in Charge. “Part of the IRS-Criminal Investigation's mission is to assure those honest taxpayers that everyone files and pays their fair share.”
According to his plea agreement, from at least 2004 until May 2008, Michael K. Lewis aired television advertisements that targeted financially-vulnerable individuals, representing that he could improve their credit, save their homes from foreclosure and assist them with bankruptcy. Viewers who called the toll-free number were scheduled to meet with Lewis. At the meetings, they were solicited to purchase a variety of for-fee services for reducing debt, as well as a pre-paid legal plan, income tax return preparation services and bankruptcy petition preparation.
Lewis, Thomas, and co-conspirator Cheryl Brooke specifically targeted individuals who owned and had equity in their homes, but were facing foreclosure on their homes because of their inability to make monthly mortgage payments. The goal of the conspirators was to steal the homeowners’ equity out of their property by inducing the homeowners to sell their property to co-conspirator Earnest Lewis and converting sale proceeds to the use of the conspirators. Lewis and his co-conspirators did this by fraudulently representing to the homeowners that their “lease/buy-back program” would help the homeowners to keep their homes. Lewis and Thomas, a senior loan officer with a mortgage lender, told the homeowners that the “good credit” of Earnest Lewis would be used to temporarily refinance their homes, that they had to sign their homes over to Earnest Lewis and that they could repurchase the homes in roughly one year, or once they regained their financial footing. During the interim, they could remain in their homes only by paying inflated “rent” and fees, which payments were directly debited from their bank accounts to an account belonging to co-conspirator Cheryl Brooke’s company “In the House Technologies.” Brooke then made payments to Earnest Lewis and Thomas, with the remaining funds being used by Michael K. Lewis and Brooke for their personal benefit.
Lewis, Earnest Lewis and Thomas lied to the homeowners or omitted details as to the amount of money that the homeowners would receive at settlement, what would be done with any equity in the homes and the need to file for bankruptcy protection and failed to inform the homeowners of the particulars of how the lease/buy-back program worked.
In addition, in order to induce mortgage lenders to provide mortgage loans to purchase the homes, Thomas submitted false financial and employment information to mortgage lenders. After financing was obtained to purchase the properties, Brooke would file motions to dismiss the homeowners’ bankruptcy cases so that the settlements could take place.
Finally, Thomas failed to file individual federal income tax returns for the years 2004 to 2006, resulting in a total tax loss of $57,830.
Michael K. Lewis, age 57 and his brother Earnest Lewis, age 52, both of Takoma Park, Maryland, were sentenced to 78 months in prison and 54 months in prison, respectively. Judge Chasanow also entered a forfeiture judgement against both men of $2,228,878, generated as proceeds of the criminal activity.
Cheryl Brooke, age 52, of Upper Marlboro, Maryland, pleaded guilty to her participation in the scheme and faces a maximum sentence of 20 years in prison for the conspiracy to commit wire fraud and a maximum of five years in prison for bankruptcy fraud. U.S. District Judge Deborah K. Chasanow has scheduled sentencing for Brooke on September 23, 2009.
United States Attorney Rod J. Rosenstein thanked the U.S. Postal Inspection Service, the Federal Bureau of Investigation, the Internal Revenue Service- Criminal Investigation and the United States Trustee’s Office (the Department of Justice agency that supervises bankruptcy cases and trustees) for their investigative work. Mr. Rosenstein commended Assistant United States Attorneys Gina L. Simms, Stacy Dawson Belf and Jonathan Su, who prosecuted the case.