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Monday, November 27, 2006

NORTH CAROLINA COMPANIES SENTENCED
IN FEDERAL MORTGAGE FRAUD CASE

RALEIGH - United States Attorney George E. B. Holding announced today’s sentencing of three corporations, DONALD W. GUPTON, INC., CRE PROPERTIES, LLC, and M & G PROPERTIES II, INC. Chief United States District Court Judge Louise W. Flanagan placed each of the corporations on probation for five years and ordered restitution in the amount of $7,500,292.72 to be paid jointly and severally. The corporations were also ordered to forfeit all property and DONALD W. GUPTON, INC. was ordered to comply with the consent judgment handed down in state proceedings.

DONALD W. GUPTON, a prominent business man in Henderson, North Carolina, was president of DONALD W. GUPTON, INC. which owned and operated Dynasty Homes of Henderson, Superior House Center, and Creative Real Estate and Manufacturing Housing Sales Center. GUPTON was also charged and has pled guilty to conspiracy to commit mail fraud, wire fraud and making material false statements as well as conspiracy to commit money laundering. His sentencing was continued to the January 2007 term of court.

RICHARD D. MEADOR, of Kittrell, North Carolina, and DONALD SCOTT CARROLL, of Henderson, North Carolina, both charged by Criminal Informations in related cases, were previously sentenced by Judge Flanagan on September 20, 2006. MEADOR received a sentence of 53 months’ imprisonment, three years’ supervised release and ordered to pay restitution in the amount of $1,270,299.74, while CARROLL was sentenced to 30 months’ imprisonment, three years’ supervised release and ordered to pay restitution in the amount of $1,476,830.59.

According to filed documents and information disclosed in court proceedings, GUPTON, MEADOR and CARROLL falsified information on loan applications, provided false trade-in information and titles, provided false gift letters, and false down payment information on loan applications for prospective applicants. This was done so the buyer/borrower would have a lower debt to income ratio qualifying them for a loan. Between 1999 and 2002, the conspirators sold in excess of 150 manufactured homes resulting in HUD mortgages exceeding $11,000,000. The total loss to all lenders is estimated to exceed $19,000,000.

GUPTON used the proceeds from the fraudulent loan activity to purchase real and personal property for himself and to purchase properties placed in the names of CRE PROPERTIES, LLC and M & G PROPERTIES II, Inc. The proceeds were also used to pay employee commissions, bogus gift funds and business expenses.

United States Attorney George E. B. Holding states “The U.S. Department of Justice places high priority ensuring that taxpayer funded programs do not fall prey to fraud and abuse. This important case will reinforce that message.”

Kenneth M. Donohue, Inspector General for the U.S. Department of Housing and Urban Development, Office of Inspector General states, “This joint prosecutorial effort by the U.S. Attorney’s Office, HUD’s Office of Inspector General, Internal Revenue Service’s Criminal Investigation Division and the North Carolina Real Estate Commission has helped send a strong message that those who seek to unlawfully profit by defrauding programs within HUD will be vigorously investigated and prosecuted.”

Special Agent in Charge Charles E. Hunter, Internal Revenue Service Criminal Investigation stated, “This investigation highlights what occurs when law enforcement agencies coordinate their efforts. IRS-CI will continue to provide financial expertise to these investigations because everyone benefits when we work together.”

Investigation of the case was conducted by HUD’s Office of Inspector General, Internal Revenue Service’s Criminal Investigation Division and the North Carolina Real Estate Commission. Assistant U. S. Attorney Banumathi Rangarajan prosecuted the case for the United States.

 

News releases are available on the U. S. Attorney’s web page at www.usdoj.gov/usao/nce within 48 hours of release.

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