Received
$413,075 in Compensation During Her 20 Months of Employment Despite Knowing
That No Revenue was Being Made to Pay Off Investors’ Mortgages
GREENBELT, MD—U.S. District Judge Roger
W. Titus sentenced Carole Nelson, age 53, of Washington, D.C., today to 29
months in prison followed by three years of supervised release for money
laundering in connection with her participation in a massive mortgage fraud
scheme which promised to pay off homeowners’ mortgages on their “Dream Homes”
but left them to fend for themselves. Judge Titus also entered an order
requiring Nelson to pay restitution of $34,340,830.13.
The sentence was announced by United
States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent
in Charge Richard A. McFeely of the Federal Bureau of Investigation; Acting
Special Agent in Charge Eric C. Hylton of the Internal Revenue Service-Criminal
Investigation, Washington, D.C. Field Office; Maryland Attorney General Douglas
F. Gansler; and Inspector General Jon T. Rymer of the Federal Deposit Insurance
Corporation.
“Mortgage fraud is every bit as
corrosive to society as street crime,” stated Eric Hylton, Acting Special Agent
in Charge, IRS-Criminal Investigation, Washington D.C. Field Office. “This type
of fraud has far-reaching economic consequences and severely thwarts recovery
from the foreclosure crisis, leaving communities with inflated home values and
financial institutions with uncollectible loans.”
According to Nelson’s plea agreement,
beginning in 2005, co-conspirators targeted homeowners and home purchasers to
participate in a purported mortgage payment program called the “Dream Homes
Program.” In exchange for a minimum of $50,000 initial investment and an
“administrative fee” of up to $5,000, conspirators promised to make the
homeowners’ future monthly mortgage payments and pay off the homeowner’s
mortgage within five to seven years. Dream Homes Program representatives
explained to investors that the homeowners’ initial investments would be used
to fund investments in automated teller machines (ATMs), flat screen televisions
that would show paid business advertisements, and electronic kiosks that sold
goods and services. To give investors the impression that the Dream Homes
Program was very successful, Metro Dream Homes spent hundreds of thousands of
dollars making presentations at luxury hotels such as the Washington Plaza
Hotel in Washington, D.C.; the Marriott Marquis Hotel in New York, New York;
and the Regent Beverly Wilshire Hotel in Beverly Hills, California.
In February 2006, the Dream Homes
Program added a second program called “POS Dream Homes” that offered similar
promises of paying off investor mortgages in five to seven years in exchange
for an up-front investment of $50,000 or more. Collectively, these programs had
offices in Maryland, the District of Columbia, Virginia, North Carolina, New
York, Delaware, Florida, Georgia, and California.
Nelson was hired in December 2006 at an
annual salary of $200,000 to get investor contracts in order, including the
creation of investor files. In March 2007, Nelson was named the chief financial
officer of POS Dream Homes. At no time did Nelson see any evidence of revenue
being generated from investments in ATMs and electronic billboards to pay off
the investors’ mortgages.
Nelson profited significantly during her
time with Metro Dream Homes. For example, in May 2007, to document that she had
a certain amount of assets in order to qualify for a home mortgage, Nelson and
another conspirator agreed that Nelson would obtain a check from the company
for $75,000 marked as an annual bonus. Nelson wrote herself a $75,000 check,
drawn on the POS bank account, and deposited the check into her personal
account. In fact, Nelson was not entitled to any bonus. In May 2007, a related
Metro Dream Homes company allocated $150,000 to Nelson and her spouse to open
“Ambassador Dream Homes,” which was supposed to be an affiliate of Metro Dream
Homes. Ambassador Dream Homes did not commence operations prior to it being
assumed by the receiver appointed by the Maryland state courts.
In July 2007, Nelson and a conspirator
decided they wanted to purchase new Bentley automobiles costing $200,000 each.
In order to qualify for financing, Nelson falsely represented in a vehicle
financing application that she had been the chief financial officer of POS
Dream Homes for 18 years and that her annual income was $700,000.
In all, during her 20 months of
employment with Metro Dream Homes (MDH), Nelson received $413,075 in
compensation.
On August 15, 2007, the Maryland
Securities Commissioner issued a cease-and-desist order to MDH and other
related companies directing them to immediately cease the offering and sale of
unregistered securities in connection with their promotion of the Dream Homes
Program. However, Williams thereafter called meetings in which investors were
told that MDH was earning up to $10 million in one month and that the company’s
legal difficulties were the result of either misunderstandings or racial animus
against company leaders. In October 2007, the Circuit Court for Prince George’s
County, Maryland granted the commissioner’s motion to freeze MDH assets and
appointed a receiver.
As a result of the scheme, more than
1,000 investors in the Dream Homes Program invested approximately $78 million.
When Nelson’s co-conspirators stopped making the mortgage payments, the
homeowners were left to attempt to make the mortgage payments that MDH had
promised to make in full.
Nelson is the last defendant to be
sentenced in this case. MDH’s owner and founder Andrew Hamilton Williams, Jr.,
age 61, of Hollywood, Florida; chief financial officer Michael Anthony Hickson,
age 49, of Commack, New York; president Isaac Jerome Smith, age 49, of
Spotsylvania, Virginia; and vice president of operations Alvita Karen Gunn, age
34, of Hanover, Maryland, were all convicted by a federal jury of fraud
conspiracy, wire fraud, and/or conspiracy to commit money laundering in
connection with their participation in the mortgage fraud scheme. Hickson was
also convicted of making a false statement in a federal court proceeding. Judge
Titus sentenced Williams to 150 years in prison, Hickson to 10 years in prison,
Smith to 70 months in prison, and Gunn to 60 months in prison.
This prosecution is being brought
jointly by the Maryland and Washington, D.C. Mortgage Fraud Task Forces, which
are comprised of federal, state, and local law enforcement agencies in
Maryland, Washington, D.C. and Northern Virginia. The task forces were formed
to promote the early detection, identification, prevention, and prosecution of
various kinds of mortgage fraud schemes. This case, as well as other cases
brought by members of the task forces, demonstrates the commitment of law
enforcement agencies to protect consumers from fraud and help to ensure the
integrity of the mortgage market and other credit markets. Information about
mortgage fraud prosecutions is available on the Internet at
http://www.usdoj.gov/usao/md/Mortgage-Fraud/index.html.
United States Attorney Rod J. Rosenstein
praised the FBI, the IRS-Criminal Investigation, the Maryland Attorney
General’s Office-Securities Division, and the Federal Deposit Insurance
Corporation-Office of Inspector General for their investigative work. Mr.
Rosenstein thanked Assistant U.S. Attorney Christen A. Sproule, who prosecuted
the case.
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