Romeo Home Builder Gets Jail Time in Mortgage Fraud Scheme

Giuseppe Cracchiolo, 60, of Romeo, Michigan, was sentenced for his role in a mortgage fraud scheme to six months’ imprisonment, followed by three years’ supervised release, United States Attorney Barbara L. McQuade announced today.

McQuade was joined in the announcement by Special Agent in Charge Erick Martinez, Internal Revenue Service Criminal Investigation Division; Andrew Arena, Special Agent in Charge, Federal Bureau of Investigation, Detroit; Robert L. Davila, Special Agent in Charge U.S. Treasury Inspector General for Tax Administration; and Dean Tirro, Acting Special Agent in Charge United States Secret Service, Detroit.

United States District Judge George Caram Steeh also ordered Cracchiolo to serve an additional six months' home confinement and pay restitution of $1,654,500 to numerous financial institutions. In September 2010, Cracchiolo pleaded guilty to conspiracy to commit wire fraud.

According to court records, from 2002 through 2005, Atiim Collins, 38, of Detroit, Michigan, owner of Edgewood Property Management, in Shelby Township, Michigan, recruited and paid individuals to act as straw buyers in fraudulent mortgage loan transactions. The scheme to defraud involved homes built by Cracchiolo, through his company, Mark Christian, Inc (MCI), in Romeo, Michigan. The straw buyers generally had good credit ratings, but not enough income, and lacked the qualifications necessary to purchase the properties. Ted Carter, 59, of Detroit, Michigan, participated in the conspiracy by creating false documents, including fictitious W-2 forms and pay stubs. These false documents were used by the straw buyers to support the fraudulently inflated asset and income information submitted on their mortgage loan applications. After the loans were approved by the lending companies, Cracchiolo used MCI to receive and disburse the illegally gained proceeds. This scheme to defraud resulted in the approval and disbursement of over $4.1 million in fraudulent mortgage loans.

Cracchiolo admitted that, during the conspiracy, he arranged to have the illegally obtained loan proceeds transferred back to borrowers and others without the knowledge and approval of the lending companies. All of the properties involved in the fraud went into foreclosure resulting in approximately $2.5 million in losses to the lenders.

McQuade said, "We are all victims in a case like this because fraudulent loans lead to foreclosures and vacant homes, which lower property values and become havens for criminal activity."

"Those who line their pockets with profits from these schemes should know they will not go undetected and will be held accountable," said Erick Martinez, Special Agent in Charge IRS-Criminal Investigation. "IRS stands ready to partner with all law enforcement agencies to pursue individuals who commit these types of crimes that can negatively impact our community and economy."

On December 3, 2010, Carter was sentenced to one year and a day imprisonment, followed by two years’ supervised release. On December 6, 2010, Collins was sentenced to five years’ probation, with one year to be served at a residential reentry center, and six months' home confinement. They must also pay restitution, joint and several, with Cracchiolo.

This case is being prosecuted by Assistant U.S. Attorney Karen Reynolds.