Man pleads guilty to arson conspiracy, money-laundering

He admitted bilking lenders of $1 million in flipping scheme

October 02, 2001|By John B. O'Donnell | John B. O'Donnell,SUN STAFF

A man who admitted that he cheated mortgage lenders out of more than $1 million in a property flipping scheme and laundered hundreds of thousands of dollars through Cayman Islands bank accounts pleaded guilty in federal court yesterday.

Scott Dunning Mead pleaded guilty to money-laundering and conspiracy to commit arson, admitting that he arranged to have a Baltimore rowhouse set ablaze after learning he could not flip it.

As part of his plea deal, Mead agreed to forfeit all money and assets that he obtained as a result of his fraudulent real estate deals.

"As of June 2001, Mead still had control over between $300,000 and $350,000 in money and assets associated with these financial transactions," said a statement of facts to which Mead agreed.

He was ordered to turn over $130,000 in cash, a condominium in Montana and "any and all vehicles" he owns.

Mead flipped scores of Baltimore houses over a four-year period, the prosecutor, Assistant U.S. Attorney Joseph L. Evans, said after yesterday's hearing.

In the statement of facts, Mead acknowledged that from early 1997 to the middle of this year, he bought low-cost city houses and quickly resold them at "fraudulently inflated prices" that exceeded their value, often by 100 percent or 200 percent. Buyers were required to put little or no money into the deals and were promised cash at settlement.

Mead admitted that he used false and fraudulent information to obtain mortgages for the buyers and that mortgage brokers and settlement agents aided him.

"Mead caused the lenders to issue loans totaling more than $1 million more than the value of the real property that was the underlying collateral for those loans," the statement of facts said.

Mead used several corporations and aliases in his transactions.

After he flipped a house, the statement said, Mead had settlement agents deposit his proceeds in a Bank of New York account held by National Cayman Bank. The funds were then moved to Mead accounts at National Cayman Bank in the Cayman Islands.

U.S. District Judge J. Frederick Motz set sentencing for Nov. 26. Under his plea agreement and federal sentencing guidelines, Mead faces five to six years in prison.

Mead has been held without bail since his arrest in Montana in June. Motz agreed to free him on home monitoring pending sentencing.

The arson charge stemmed from a 1999 fire in a small, two-story rowhouse in the 1700 block of Ramsay St. in Southwest Baltimore. Mead admitted buying the house in 1998 from the U.S. Department of Housing and Urban Development for $2,500 in the name of an employee and lining up a buyer who agreed to purchase it for $50,000.

The statement said Mead discovered court judgments against the employee that would have wiped out his profits and so decided to burn the house.

He concocted a backdated mortgage that said one of his corporations had lent $60,000 on the house and then took out an insurance policy, the statement said.

Mead admitted that he and a co-defendant, who pleaded guilty Sept. 21, placed containers of gasoline in the house and that he gave a key to a friend who started the fire Oct. 9, 1999.

The fire "all but destroyed the house," the statement said. An adjacent house occupied by a family with small children suffered extensive smoke and water damage.

Mead admitted that he then filed a fraudulent $60,000 insurance claim, which was never paid because the insurance company became suspicious.

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