Sixteen people have been charged with operating a fraudulent telemarketing scheme that lured more than 290 real estate investors in 46 states into a home flipping fraud scheme to purchase 2,000 residential properties in Detroit by lying about the properties being bank-owned and lying about the properties’ value, according to a statement from the U.S. attorney in Detroit. The fraud scheme led to losses of over $20 million from December 2009 through March 2014. “By using sham transactions, the scheme also induced investors into believing that there was a ready market and process for flipping these same residential properties to purported hedge funds and foreign investors, which had the desired effect of encouraging the scheme’s investors to purchase multiple homes,” the indictment states. The homes were often acquired for no more than $500 before quickly being sold by the telemarketers to investors for between $7,500 and $15,000, according to the statement. After an investor agreed to purchase one home, the telemarketers led the investor to believe that it was quickly resold to a hedge fund or foreign buyer for a substantial profit. In reality, the property was transferred to a shell company controlled by the telemarketers for no consideration and there were no profits. Based on these sham transactions, which caused investors to believe that there was an established process and market for flipping homes in Detroit, numerous investors purchased multiple additional homes from the telemarketers. The flipping fraud contributed to Detroit blight After purchasing a substantial number of homes, the investors had difficulty contacting the telemarketers and eventually all communication ceased. The telemarketers utilized aliases and frequently changed the name of their company to avoid disgruntled investors and law enforcement. “This nationwide telemarketing fraud not only caused millions of dollars in losses to victims of the scheme, but it also contributed to blight in Detroit neighborhoods,” U.S. Attorney Barbara L. McQuade said in the statement. “Thousands of homes were left to fall into decay as a result of these individuals using Detroit real estate as a commodity to accomplish their fraud.” “The perpetrators in this case stole millions of dollars from hundreds of victims,” Paul M. Abbate, Special Agent in Charge of the FBI Detroit Field Office, said in the statement. “However, they did more than steal money – their greed and fraud compounded the proliferation of vacant homes left for ruin in far too many Detroit neighborhoods. The FBI is committed to rooting out and bringing to justice those who would commit crimes of this nature and act against the interests of our communities.” The following individuals were charged: • Izhak Halbani (Florida resident) • Antwan Reid (Florida resident) • Scott Amster (Florida resident) • Richard Pierce (Michigan resident) • Matthew Golden (Michigan resident) • Erez Arsoni (New York resident) • Gregory Swarn (New York resident) • Joseph Arsenault (New York resident) • Richard Silverstein (Florida resident) • Michelle Pintado (Florida resident) • John Trumble (Florida resident) • Wayne Scott Simpson (Florida resident) • Theodore Jacobs (Florida resident) • Joseph Haden (Florida resident) • Scott Lipman (Florida resident) • Steven Goldstein (Florida resident) The charges include conspiracy to commit mail and wire fraud, 15 underlying wire fraud counts, and conspiracy to commit international money laundering. Each of the 17 counts in the first superseding indictment carries a potential sentence of 20 years’ imprisonment. The FBI arrested numerous individuals in Florida on Friday, Nov. 21, 2014, prompting the unsealing of the charges. The fraudulent telemarketing operation, operated from call centers in Florida and NewYork, made unsolicited telephone calls to investors to convince them to buy real estate in Detroit, according to the indictment. The corporations were doing business as telemarketing firms and used the names Nation’s Trust, Nationwide REO Group, Prudential REO Group, First Choice REO Group, Continental REO Group, Allstate REO Group, American Real Estate Advisors, Blackstone Real Estate Group and Cambridge Real Estate Group, according to the indictment. Employees of the telemarketing operation characterized the following companies as regional mortgage lenders that we willing to sell bank-foreclosed properties for discounted prices: Chase REO Group, Hartwell Mortgage Group, and U.S. Mortgage Specialists. In reality, these companies were not regional mortgage lenders but instead were holding companies that were controlled by the same individuals who controlled the telemarketing operation, according to the indictment. The telemarketing operation employed sales agents or brokers, closers, loaders and managers. Sales agents or brokers made the initial contact with potential real estate investors with unsolicited telephone calls. The broker, working from a scripted sales pitch, would attempt to entice investors to purchase real estate, primarily located in Detroit. Closers spoke with the investors after the initial pitch to persuade them to purchase one or more properties. Loaders spoke next with investors to convince them to make a more substantial investment by encouraging the investors to purchase a package containing multiple single-family homes.
The post 16 indicted in real estate flipping fraud that lured 290 real estate investors appeared first on Personal Real Estate Investor Magazine.
