Man gets 64 months in flipping scheme

He had helped recover laundered money as part of plea agreement

February 08, 2002|By John B. O'Donnell | John B. O'Donnell,SUN STAFF

A man who flipped dozens of Baltimore houses, often using aliases, and then laundered hundreds of thousands of dollars in illicit profits through Cayman Islands bank accounts was sentenced yesterday to 64 months in federal prison.

Scott Dunning Mead, 31, pleaded guilty in October to money laundering and conspiracy to commit arson and admitted that he had cheated mortgage lenders out of more than $1 million with his flipping scheme.

The arson charge involved a Southwest Baltimore rowhouse that Mead arranged to have burned in hopes of collecting insurance after he learned that he could not flip it.

As part of his plea deal, Mead helped the government recover $187,856.13 from his bank accounts in the Cayman Islands and Liechtenstein and from the sale of a Montana ski condominium that he bought and moved to after learning he was under investigation.

Another $50,000 from the overseas accounts financed his defense, according to Joshua R. Treem, his attorney.

U.S. District Judge J. Frederick Motz ordered that about $82,000 of the recovered funds go to several individuals harmed by Mead's actions, to two organizations trying to combat the effects of flipping -- the Patterson Park Community Development Corp. and the Community Law Center -- and to an insurance company that was defrauded.

The rest of the money will be split evenly among the law enforcement agencies that investigated Mead -- the Postal Inspection Service; Internal Revenue Service; Bureau of Alcohol, Tobacco and Firearms; and city Police Department.

Just before Motz pronounced sentence, Mead told him, "I've had 2 1/2 years to ponder my decisions and what I've done. No words can truly make clear how much I regret that. Now all I can do is look to my future."

Mead has cooperated with the federal investigations of other suspected flippers and, his attorney said, turned over boxes of documents that he had stashed in a safe deposit box in a European bank.

Mead was arrested in Montana in June and jailed until he entered his guilty plea Oct. 1 and turned over the funds. The government opposed efforts to have him released on bond because he was an airplane pilot with money overseas who had used various aliases.

At his guilty plea, Mead agreed to a statement of facts written by prosecutor Joseph L. Evans. It said that over a four-year period 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 put little or no money into the deals and were promised cash at settlement.

Mead acknowledged that, helped by mortgage brokers and settlement agents, he used false information to obtain mortgages for the buyers. He admitted that the loans exceeded the value of the houses by more than $1 million.

After the deals were closed, Mead had his proceeds wired to the Bank of New York and then to the Cayman Islands. When he learned of the federal investigation, Evans said in a court filing, Mead moved much of the money to Liechtenstein.

The arson charge involved a two-story rowhouse in the 1700 block of Ramsay St. In 1998, Mead bought the house in the name of an employee for $2,500 and planned to sell it for $50,000. He discovered that court judgments against the employee would have wiped out his profit.

Mead concocted a backdated phony mortgage that said one of his corporations had lent $60,000 on the house. Then he took out an insurance policy.

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