Two Defendants Convicted in a Rent-to-own Vehicle Fraud Scheme
Baltimore, Maryland - A federal jury convicted Lamondes Dorian Williams, age 42, of Baltimore, Maryland and Erica Brown, age 29, of Laurel, Maryland, today of charges related to a wire and mail fraud conspiracy in which the defendants falsely promised individuals with poor credit assistance in obtaining a vehicle which they could rent-to-own.
The convictions were announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge Barbara Golden of the United States Secret Service – Baltimore Field Office.
According to evidence presented at the nine day trial, from September 2010, through March 2011, Williams advertised a rent-to-own program for vehicles. Brown worked for Williams and promoted his scheme. Williams and Brown informed their victims that to enter the rent-to-own program they must make a large cash payment up front, referred to as an “administrative fee,”and then a below market rate cash payment each month, and they would be able to drive a vehicle which would ultimately belong to them. After the victims paid the cash fees, Williams or Brown took them to car rental agencies where they had the victims sign the contract with the car rental agency. Most of the time, Williams rented the car for only a short period of time, such as two to four days, without telling the victims. Williams and Brown took cash from new victims to make partial payments on the original victims’ rental contracts in order to keep the scheme afloat. As the payments on the rental vehicles fell further into arrears, the rental agency contacted the victims and instructed the victims to return the vehicles. When a victim complained to Williams or Brown that they had to return the vehicle, Williams refused to return the fees paid by the victim.
Evidence was presented at trial showing that prior to and during the time he was promoting the vehicle rent-to-own program Williams engaged in other fraudulent schemes, all of which targeted individuals with poor credit who could not afford the product or service that Williams advertised. In all of the schemes, Williams offered prices that were below the actual cost of the products or services in order to entice the victims to pay a large up front fee. As a result, all of the schemes were pyramid-like schemes, in that Williams could not continue to pay for the existing customer (victim) base without adding ever increasing numbers of new victims.
For example, in 2005 Williams was convicted in Prince George’s County of felony theft, conspiracy to commit theft, and conducting a pyramid promotional scheme. The evidence in that case showed that in 2004, Williams, used his business Professional Sales Group (“PSG”), to place advertisements in local papers, claiming that PSG could place individuals with poor credit in rental housing at low prices. When prospective customers contacted PSG, they were told that after they paid an “administrative fee” and two months’ rent they would be placed in discounted housing that included utilities. Williams rented the apartments and townhouses at market rate, then sublet to his customers. The rent that Williams charged the customers was far below what he had to pay in rent, and included utilities and cable television. Within a few months of being placed into apartments, many PSG clients were informed by the owners or rental agencies that their rent was in arrears, and most were forced to move out. Many other clients paid the large administrative fee, usually over $1,000, and were never placed in an apartment at all.
According to trial evidence, following Williams release from the Maryland Department of Corrections, he started a new business that again targeted people with poor credit, offered apartments for rent far below market value, and also purported to provide cars, phones, electronics equipment, credit repair, and other goods and services. Customers/members were required to pay administrative fees, monthly membership payments, and to supply the names and phone numbers of 100 prospective new members. The business used various names including Digital Zone Electronics Warehouse, LLC, Diversified Marketing Consultants, Inc. a/k/a DMC, Mainline Properties, LLC, and others. Hundreds of people paid administrative fees and were placed into housing, only to be evicted a short time later.
The evidence also showed that in February 2008, Williams started another business, 2K Tek Business Solutions, LLC, that focused on the rental of cars from Thrifty Car Rental. Williams filled out a credit application with Thrifty, in order to place “employees” of 2K Tek in Thrifty rental cars at a corporate discount, and so that Thrifty would extend credit to 2K Tek, and bill 2K Tek directly at the end of each month. Williams used two companies that he controlled – Mainline Properties and Digital Zone Electronics Warehouse - as credit references. Thrifty approved Williams’ credit application based on favorable information provided by those companies about 2K Tek, including false information about credit they extended to 2K Tek. Starting in approximately April 2008, Williams made reservations for individuals he represented to be employees of 2K Tek, but who were actually customers of his business.
According to the evidence presented, not long after the rentals began, Williams fell behind on his payments to Thrifty, and did not make the payments for at least 55 vehicles. Thrifty demanded the return of all of these cars, and Williams owed over $44,000 that he never paid to Thrifty.
Williams faces a maximum sentence of 20 years in prison for the conspiracy and for each of 19 counts of wire fraud and 11 counts of mail fraud. Brown faces 20 years in prison on each of four counts of wire fraud and five counts of mail fraud. U.S. District Judge James K. Bredar has scheduled sentencing for Williams and Brown on February 16, 2012.
United States Attorney Rod J. Rosenstein praised the Secret Service for its work in the investigation and thanked Assistant United States Attorneys Paul E. Budlow, P. Michael Cunningham and Mara Zusman Greenberg, who are prosecuting the case.