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.
