Man Sentenced to 10 Years in Federal Prison for Running Real Estate Investment Scheme Targeting Senior Citizens
Caused Victim Investors to Suffer $7 Million in Losses
DALLAS — Carl Keith Battie, a/k/a “Carl Hampton,” 60, was sentenced this morning by U.S. District Judge Sidney A. Fitzwater to 10 years in federal prison and ordered to pay $11,407,794 in restitution, following his guilty plea in June 2016 to a superseding indictment charging one count of conspiracy to commit wire fraud, announced U.S. Attorney John Parker of the Northern District of Texas.
Battie’s sentence will run concurrently with any sentence imposed in People of the State of California v. Carl Keith Battie, in the Superior Court of California, County of San Diego. Battie has been in custody since his arrest on this related state case while he was living in Atlanta. Battie must also forfeit property that was seized from his home in Atlanta, including a vehicle, U.S. and Iraqi currency, numerous jewelry items, and more than $100,000 seized from bank accounts.
According to documents filed in the case, from approximately May 2011 to March 2014, Battie conspired with others, including “Person A,” to defraud investors in connection with the fraudulent sale, and offer of sale, of real estate investments. Part of his scheme involved inducing victim investors to purchase mortgage notes based on material misrepresentations about the true value of the mortgage notes and the real property underlying the notes, for the personal enrichment of Battie, Person A, and others.
To further his scheme, Battie owned and operated several businesses entities, out of offices in Dallas, including Lien Exchange TX, LLC; Lien Exchange, Inc.; Family First NV, LLC; Loving Life Studios, LLC; WCM Direct, Inc.; and Entrust. Person A also operated multiple business entities in Addison, Texas, in furtherance of the scheme.
Battie located and purchased distressed and dilapidates real estate, mostly in the St. Louis, Missouri, area, which had already been foreclosed upon by other financial institutions. Battie, using the various business entities, flipped the properties one or more times over the course of several months or years to create the appearance of a market and inflate the appraised values of the properties. At Battie’s direction, associates falsified signatures and notaries on property records that were later filed with the St. Louis County Clerk’s office and the City of St. Louis Recorder of Deeds. In turn, Person A sold the fraudulently inflated mortgage notes to victim investors and then paid one of Battie’s companies from funds received from victim investors.
Battie directed Person A on how to “pitch” the investment opportunity to potential investors, typically senior citizens, at investment seminars at high-end restaurants. Among other things, Person A made numerous factual and material misrepresentations about the value of the properties underlying the mortgage notes and the solvency of the company and omitted details about the condition of the properties. For instance, Person A misrepresented that investors were purchasing a mortgage note for a rehabilitated property that had a stable, civil servant residing in the property who would make rent payments, when in reality, as Battie and Person A knew, many of the properties did not have any tenants, or in cases where tenants were living in the properties, they were not civil servants with steady income.
Over the course of the scheme, Battie acquired approximately 120 properties that he used in furtherance of his scheme. Between June 2010 and February 2014, Battie and Person A, and others, raised approximately $12.5 million from victim investors and caused more than $7 million in losses. In fact, at least 40 victim investors suffered significant financial hardship as a result of his scheme.
The case was investigated by the U.S. Securities and Exchange Commission, the California Department of Insurance, the California Department of Business Oversight, and the San Diego District Attorney’s Office.
Assistant U.S. Attorney J. Nicholas Bunch was in charge of the prosecution.
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