8 accused of loan scheme

Preyed on people facing foreclosure, officials say

June 13, 2008|By Nick Madigan | Nick Madigan,Sun Reporter

GREENBELT - Federal prosecutors accused eight people yesterday of bilking homeowners and banks of more than $35 million in a complicated mortgage fraud scheme involving phony loans and home purchases.

The defendants, several of whom are related, preyed on homeowners who were in trouble with their mortgages and were facing foreclosure, according to a 47-page grand jury indictment filed in U.S. District Court. Under the scheme, the defendants promised to help them if they would temporarily turn over ownership of their homes, prosecutors said.

The defendants took out new mortgages under false pretenses and made off with the proceeds, U.S. Attorney Rod J. Rosenstein said in a news conference here.

Seven of the defendants were arrested yesterday in early-morning raids and appeared in court to hear the multiple charges they face. The eighth remains at large.

Experts say such schemes are becoming more common as the national foreclosure crisis deepens and homeowners become more desperate.

"The smooth talker is probably a con artist," Rosenstein said, warning citizens to be wary of such scams. "You should be reluctant to hand over your home to someone who promises to solve all your problems."

The indictment says that representatives of Lanham-based Metropolitan Money Store Corp. and affiliated companies in Prince George's County operated a "foreclosure reversal scheme" in which they tricked more than 100 people into signing over the titles of their homes, ran up equity loans and pocketed the money they had assured homeowners would be put into escrow to pay their bills.

The defendants are Joy Jackson, 40, and her husband, Kurt Fordham, 38, of Fort Washington; Jennifer McCall, 46, her husband, Clifford McCall, 47, McCall's daughter Chandra Jones, 30, and Wilbur Ballesteros, 32, all of Lanham; Fordham's sister, Katisha Fordham, 35, of Washington; and Ronald Chapman, 33, of Washington.

They are all charged with conspiracy to commit mail and wire fraud and 15 counts of mail fraud, for which they face maximum sentences of 30 years in prison and a $1 million fine on each count.

Jackson and Kurt Fordham are also charged with six counts of money laundering, and Jennifer McCall, Clifford McCall and Jones are each charged with one count of money laundering. They face 10 years in prison and a $250,000 fine on each count.

Fordham and his wife appeared in court in Raleigh, N.C., after being arrested there yesterday morning, prosecutors said. They were ordered held and will appear in court again when they are returned to Maryland, probably next week, said Marcia Murphy, a spokeswoman for the U.S. Attorney's Office in Baltimore.

Chapman was still being sought yesterday. The other five made their first court appearances here before U.S. Magistrate Judge Charles B. Day, who ordered all but Jennifer McCall released under the supervision of Pretrial Services, provided they remain in the Washington area.

McCall, described in court by Assisstant U.S. Attorney James A. Crowell IV as the "chief architect of this scheme," was ordered to remain in custody until a family member produces her passport. Crowell told the judge that millions of dollars remain missing from the proceeds of the scheme and that McCall, a citizen of the Cayman Islands, poses a flight risk.

In a barely audible voice, McCall said she understood the judge's instructions that, once released, she not obtain employment in real estate and that she not seek lines of credit without the approval of Pretrial Services.

Mortgage schemes have become pervasive around the country, particularly as the number of foreclosures has skyrocketed. The Federal Bureau of Investigation found that suspicious activity reports related to mortgage fraud jumped to nearly 47,000 in fiscal year 2007, a seven-fold increase over the previous four years. Financial institutions are required to file such reports.

A confluence of factors made homeowners a prime target of fraud. Many landed in foreclosure after taking out subprime loans they could not afford or were victims of predatory loan schemes, while rising home prices meant that foreclosure rescue scams could be more lucrative.

"Many of these homeowners are unsophisticated or first-time home buyers," said Phillip Robinson, executive director of Civil Justice Inc., a nonprofit group that offers legal services to low- and moderate-income Marylanders. "They are not working or behind on their bills, and they are stressed, and they are willing to trust anyone."

The indictment alleges that the defendants set up a system in which "straw buyers" posed as saviors of victims' properties in order to help them avoid foreclosure. The homeowners were persuaded to allow title to their homes to be put in the names of the straw buyers for a one-year period, during which time the defendants would ostensibly help the homeowners obtain more favorable mortgages, improve their credit ratings and eventually return title to their homes to them.

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