A former Baltimore mortgage broker who was convicted in the 1980s of selling fraudulent mortgages was charged in U.S District Court yesterday with fraud and money laundering in another alleged bogus mortgage financing scheme, the U.S. attorney's office said.
Michael H. Clott, who is in a federal prison in Petersburg, Va., for violating the terms of his release from custody in May 1994, was charged in a criminal information with fraudulently obtaining about $2.5 million from homeowners who were induced to participate in a bogus home refinancing program. Clott converted at least $1.3 million for his personal use, the information said.
Clott was convicted in 1987 of mail fraud and racketeering for his involvement in a mortgage loan scheme in which his company, First American Mortgage Co., made high-interest loans for home mortgages to high-risk borrowers. But Clott in turn sold the same mortgage several times to other investors.
He was also convicted in 1987 of interstate transportation of forged securities in a separate fraud scheme. After those convictions, Clott signed a consent decree with the state of Maryland agreeing never to engage in the securities and mortgage business. In 1989, Clott was convicted of bank fraud for kiting $280,000 in bad checks.
Soon after his release, the information alleges, Clott began his latest mortgage fraud scheme, in which he persuaded homeowners to participate in the "7.5 percent loan program," in which he promised to refinance their entire second mortgage plus an additional equity line of credit at a 30-year, 7.5 percent rate.
Clott allegedly persuaded the homeowners to sign equity checks they had received after settlements with their original mortgage companies over to his company, Phoenix Financial Services Inc. The funds were then allegedly deposited into bank accounts belonging to Clott or to business accounts controlled by Clott.
In addition to the criminal charges, the U.S. attorney general is also seeking the forfeiture of all property Clott used to carry out the alleged scheme, including a $650,000 home in the Washington suburb of Potomac, a 1995 Jeep Cherokee, jewelry and various bank accounts.
Pub Date: 10/02/96
