Federal fraud trial begins for three charged in property flipping case

Man who pleaded guilty is expected to testify

January 17, 2001|By John B. O'Donnell | John B. O'Donnell,SUN STAFF

Three people went on trial yesterday in federal court in Baltimore for their roles in what a prosecutor called "a huge flipping scheme" aimed at defrauding mortgage lenders and house purchasers.

But the major figure in the case - and the person most often mentioned to jurors yesterday - wasn't there. Carl Schulz, who has said that he flipped about 120 houses over a four-year period, pleaded guilty Jan. 3 to two counts of a 21-count indictment on charges of mail fraud and wire fraud. He's expected to testify.

On trial are Marcia McNeil, who worked with Schulz in some of his corporations, and real estate appraisers Guy Shaneybrook and Narade Pramuan, who valued houses for Schulz deals.

Robert R. Harding, an assistant U.S. attorney, told jurors in his opening statement that McNeil and Schulz worked together for more than two years.

He said they bought large groups of houses and sold them with huge price increases to aspiring investors who would buy more than one house.

Buyers were promised that they would not have to put any cash into the deal and that rental income would cover mortgage payments, Harding said.

In some cases, buyers got cash out of the deal. Documents were falsified and appraisals inflated to get the loans, he said.

"A majority of the purchasers ended up in bankruptcy or very near to it," Harding told the jury.

In one case, he said, Schulz and McNeil agreed to pay an average of $5,700 each for 61 Westport houses to flip for far more money.

McNeil's lawyer, Peter D. Ward, told the jury that he had no doubt that there was a fraud scheme, but he insisted that his client was not part of it. He said the culprits were Schulz and two partners with whom Schulz eventually split up.

McNeil was a Schulz employee for seven months, Ward said.

Lawyers for Shaneybrook and Pramuan insisted their clients are innocent. Shaneybrook received only $1,100 for appraisals he did on four deals cited in the indictment, said Richard D. Bennett, his attorney. Shaneybrook was paid a total of $7,000 for 34 appraisals for Schulz.

Pramuan's lawyer, Kenneth W. Ravenell, told jurors his client "did not inflate prices in his appraisals with the intent to defraud anyone." He said Pramuan was paid an average of $400 each for 107 appraisals for Schulz.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.