FOR IMMEDIATE RELEASE:
Wednesday, January 24, 2007
PROMINENT HENDERSON, NORTH CAROLINA BUSINESSMAN
SENTENCED IN FEDERAL MORTGAGE FRAUD CASE
RALEIGH - United States Attorney George E. B. Holding announced today’s sentencing of DONALD W. GUPTON, President of Donald W. Gupton, Inc., CRE Properties, LLC, and M & G Properties II, Inc. Chief United States District Court Judge Louise W. Flanagan sentenced GUPTON to 75 months on Count 1 and 60 months for Count 2, to be served concurrently. GUPTON pled guilty to conspiracy to commit mail fraud, wire fraud and making material false statements as well as conspiracy to commit money laundering.
According to filed documents and information disclosed in court proceedings, GUPTON, Richard D. Meador and Donald Scott 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.
Both Meador and Carroll were 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. On November 27, 2006, Judge 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 comply with the consent judgment handed down in state proceedings.
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.”
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.”
Every year, fraudulent schemes victimize individuals and businesses from many walks of life, including struggling low-income families lured into home loans they cannot afford and legitimate lenders are saddled with over-inflated mortgages loans,"said Charles E. Hunter, Special Agent in Charge, IRS-Criminal Investigation Division. "This investigation shows IRS Criminal Investigations committed to not allowing those responsible to gain financially from their fraud."
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.