Real Estate Agent Sentenced To 7 Years And Promoter Sentenced To 2 Years For Their Roles In Federal Racketeering Conspiracy
Defendants among 91 Charged in Operation Wax House
CHARLOTTE, N.C. – Nathan Shane Wolf, 44, and John Wayne Perry, Jr., 34, both of Charlotte, were sentenced this week by Senior U.S. District Judge Graham C. Mullen on federal racketeering charges, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina. An additional defendant, Purnell Wood, 44, was sentenced on Friday, July 31, 2015 for his role in the federal racketeering Enterprise.
Acting U.S. Attorney Rose is joined in making today’s announcement by John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division, Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI).
These convictions are the latest in Operation Wax House, an investigation which began in 2007. Of the 91 individuals charged, 89 defendants have either pleaded guilty or have been convicted following trial. The two remaining defendants are international fugitives. Of the 89 defendants convicted, two remain to be sentenced.
Wolf, a licensed real estate agent, was sentenced to 7 years in prison followed by three years of supervised release. Wolf was convicted by a jury in October 2013. According to trial evidence, Wolf was a participant in the enterprise’s mortgage fraud operations, accounting for over $13 million in fraudulently-obtained loans, with losses of more than $7 million. Witnesses testified that Wolf arranged for builders of luxury real estate to pretend to sell such real estate at an inflated price – what Wolf called the “gross price” – in order to get an inflated mortgage loans from a bank. In reality, the builders accepted the true, lower, price – what Wolf called the “strike price” – while Wolf arranged for the difference between the inflated price and the true price to be paid from the loan proceeds as kickbacks. Such kickbacks were funneled through sham companies and disguised to look like payments for work actually done on the real estate. Trial evidence established that the work was never done, but instead these kickbacks were payments to the buyers and promoters who helped bring the parties to the fraud together. According to the evidence at trial, the kickbacks generally ranged from approximately $50,000 to almost $600,000. According to today’s sentencing hearing, Defendant Wolf received more than $200,000 in commissions on the fraudulent transactions, which represented the vast majority of his income during the years he was committing fraud.
Perry was sentenced to 24 months in prison followed by two years of supervised release. According to court records and today’s sentencing hearing, Perry served the Enterprise as a promoter in its mortgage fraud operations, arranging a fraudulent transaction that resulted in a loss of approximately $500,000. More than $200,000 in kickbacks were then funneled through Perry’s bank account following the closing. Defendant and his co-conspirators falsely represented the kickback money was for brick work done on the property.
Wood was sentenced to 21 months in prison followed by one year supervised release. According to court records and the sentencing hearing, Wood also served the Enterprise as a promoter in its mortgage fraud operations, arranging two mortgage fraud transactions with losses of more than $1.5 million, funneling nearly a half million dollars in kickbacks through his sham company following closing. Defendant and his co-conspirators falsely represented that this kickback monies were for payment for home improvements.
In pronouncing these sentences Senior Judge Mullen noted that the calculated losses did not include the effects on the neighborhoods where houses purchased through fraud were located and that the victims of this fraud extended beyond the lending institutions to other people who lived in those neighborhoods and saw their property values negatively impacted by the fraud.
Operation Wax House in the Western District of North Carolina is being handled by the Charlotte Division of the FBI and the Criminal Division of the IRS for the Financial Fraud Enforcement Task Force, along with the Securities Division of the North Carolina Secretary of State with respect to a separate prosecution. The Operation Wax House prosecution is being handled for the government by Assistant United States Attorney Maria K. Vento. The Mehr case was tried by Assistant United States Attorneys Maria K. Vento and Jenny G. Sugar.
“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’s 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.”