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Another sad story on the fraud Ponzi Scheme. I hope all of you can read this sad story ( article written by Gazette Staff )


Four people have been indicted for running a $70 million mortgage fraud Ponzi scheme through Maryland companies and spending the stolen money on big salaries, a fleet of chauffeured luxury cars and trips to the NBA All-Star game and Super Bowl in 2007.

A federal grand jury indicted them on Wednesday; the indictment was unsealed Monday, according to a statement from Rod J. Rosenstein, U.S. attorney for Maryland.

From 2005 to 2007, the defendants, through companies including Metropolitan Grapevine of Laurel, Metro Dream Homes, POS Dream Homes and POS DH LLC, targeted homeowner and home buyers. Their Dream Homes Program called for investors to provide at least $50,000 for each home, plus an "administrative fee" of up to $5,000, according to prosecutors. All told, more than 1,000 investors pumped about $70 million into the scheme.

The program promised to make the homeowner's future monthly mortgage payments, supposedly paying off the mortgage within seven years. Afterward, the homeowner and the company would each own a half interest in the home.

Furthermore, prosecutors say representatives of the program told investors that their payments would fund investments in automated teller machines, flat-screen televisions that would show paid business advertisements, and "Touch-N-Buy" electronic kiosks that sold telephone calling cards. The program was marketed in live presentations at luxury hotels in Maryland, Washington, D.C., and Beverly Hills, Calif. However, the ATMs and other marketing devices didn't generate any significant revenue, prosecutors said.

Instead, the defendants used the proceeds to pay themselves salaries of up to $200,000 a year; hire 10 chauffeurs to drive a fleet of luxury cars; and stay in luxury accommodations at the NBA and NFL games. The money also helped pay off investors from a previous failed ATM investment venture by one of the defendants, call Bankcard Group. Donations of up to $50,000 apiece were made to charities to give the scheme a more reputable appearance, prosecutors said.

"The indictment alleges that the defendants used slick marketing to conceal empty promises," Rosenstein said. "They convinced many victims to invest at least $50,000 by refinancing their existing homes or buying new homes at inflated prices, while claiming that Metro Dream Homes would repay the mortgages with revenue from profitable businesses. … Instead, the conspirators used some of the investors' money to repay earlier investors in the Ponzi scheme and spent the remainder on themselves."

"The effects of this wide-ranging mortgage fraud scheme are particularly disturbing within the backdrop of today's economic environment, said Thomas J. Harrington of the FBI's criminal, cyber, response and services branch.

The defendants are Andrew Hamilton Williams Jr., 58, of Hollywood, Fla., who was the founder and owner of Metro Dream Homes; Michael Anthony Hickson, 46, of Commack, N.Y., CFO; Isaac Jerome Smith, 46, of Spotsylvania, Va., president; and Alvita Karen Gunn, 31, of Hanover, vice president of operations. The information also alleges that Carole Nelson, 50, of Washington, was the CFO of POS Dream Homes.

Maryland officials issued a cease-and-desist order to Williams and the companies in August 2007, but the defendants continued to misrepresent themselves, prosecutors said. In challenging the order the following month in federal court, Hickson testified that the companies' success did not rely on new investor funds; prosecutors say he knew the only revenue source was, indeed, new investments.

The four defendants face up to 20 years in prison for the fraud conspiracy; 20 years on each of the 15 counts of wire fraud; and 20 years for conspiracy to commit money laundering. Smith also faces up to 30 years for bank fraud for allegedly misrepresenting his income to get a car loan on a new Bentley.

Prosecutors also want them to forfeit the $70 million.

The indictments come on the heels of the conviction of two Prince George's residents who pleaded guilty to defrauding mortgage lenders and struggling homeowners.

Cheryl Brooke, 52, of Upper Marlboro and Winston Thomas, 43, of New Carrollton pleaded guilty in U.S. District Court in Greenbelt, Rosenstein said in a statement.

"Cheryl Brooke and Winston Thomas stole the homeowners' equity by inducing financially-vulnerable homeowners to sell their properties and convert the sale proceeds to the use of the conspirators," Rosenstein said.

Homeowners were solicited to buy for-fee services for reducing debt and a legal plan, income tax return preparation services and bankruptcy petition preparation. Thomas, then a senior loan officer with a mortgage lender, and Brooke targeted individuals who owned and had equity in their homes, but were facing foreclosure, prosecutors said.

Brooke and Thomas face up to 20 years for conspiracy to commit wire fraud. Sentencing is scheduled for July 31. Brooke and Thomas also agreed to forfeit $2.23 million.