Oklahoma Consultant Charged With Defrauding Real Estate Developers Of More Than $1.5 Million
The Defendant And His Co-Conspirators Allegedly Stole Fees Placed In An Attorney Escrow Account And Used The Fees For Personal Expenses And Other Business Ventures
BROOKLYN, N.Y. – Stephen Holsey, a senior consultant to Strategic Development Corporation (SDC), an Oklahoma corporation, was arrested yesterday on charges of wire fraud conspiracy in connection with a more than $1.5 million “advance fee” scheme. Essentially, Holsey and his co-conspirators offered loans through SDC to developers who were looking to finance large-scale construction projects, in exchange for a ten-percent fee, even though SDC lacked the necessary funds to finance these projects. Holsey’s initial appearance for removal proceedings to the Eastern District of New York took place yesterday before United States Magistrate Judge Steven P. Shreder at the United States Courthouse, 101 North 5th Street, Muskogee, Oklahoma.
The charges were announced by Robert L. Capers, United States Attorney for the Eastern District of New York, and William F. Sweeney, Jr., Assistant Director-in-Charge of the Federal Bureau of Investigation, New York Field Office (FBI).
“As alleged, the defendant and his co-conspirators used lies and deceit to induce unsuspecting real estate developers in need of financing for their projects to pay more than $1.5 million in fees in exchange for loans that conspirators knew they could never finance,” stated United States Attorney Capers. “We are committed to holding accountable fraudsters who seek to prey on businesses for personal gain.” Mr. Capers extended his appreciation to the Federal Bureau of Investigation, the agency responsible for leading the government’s investigation.
“In a time when new construction projects meant potential jobs and employment for many, the subjects in this case allegedly dangled that prospect in front of companies so they could finance their lavish lifestyles. Fraud and theft take on many forms, and the FBI and our partners are focused on finding these crimes wherever scammers try to hide them,” stated FBI Assistant Director-in-Charge Sweeney.
According to the complaint unsealed yesterday, between May 2010 and March 2012, Holsey and his co-conspirators offered loans through SDC to developers to finance large-scale construction projects. Specifically, Holsey and his co-conspirators told developers that: (i) SDC had funds available to provide financing for the developers’ projects in exchange for a fee, payable in advance, of ten percent of the loan amount; (ii) the ten-percent fee would be placed in an attorney escrow account until the loan closed; and (iii) the ten-percent fee would be refunded if SDC did not fund the project. Contrary to these representations: (i) SDC did not have the funds necessary to provide financing for the developers’ projects; (ii) the ten-perfect fees were transferred almost immediately, prior to the loan closings, from the attorney escrow account to accounts controlled by Holsey and his co-conspirators; and (iii) despite the lack of funding, the fees were not refunded to the developers and the developers’ associates when SDC did not fund the projects. In sum, Holsey and his co-conspirators collected approximately $1.5 million in the form of fees and investments from approximately 15 individuals and corporate entities and used those funds to, among other things, pay for personal living expenses and funnel money to other businesses owned or controlled by Holsey and his co-conspirators.
The charges in the complaint are merely allegations, and the defendant is presumed innocent unless and until proven guilty. If convicted, Holsey faces a maximum sentence of 20 years’ imprisonment.
The government’s case is being prosecuted by the Office’s Business and Securities Fraud Section. Assistant United States Attorney Tyler Smith is responsible for the prosecution.
The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.
E.D.N.Y. Docket No. 16-M-1113