Columbus Man Pleads Guilty to Mortgage Fraud

Charles E. Townsend of Columbus, Ohio, pleaded guilty to money laundering in connection to a mortgage fraud scheme that exaggerated the values of properties in primarily low income neighborhoods in Columbus in order to secure funding from investors. According to William E. Hunt, acting U.S. attorney for the Southern District of Ohio, Townsend helped two co-conspirators, Aryeh Schottenstein and Jeffery Lieberman, fraudulently secure funding from Stillwater Investments Group of New York for real estate transactions involving Columbus properties. Townsend grossly exaggerated the value of properties in order to induce Stillwater to fund the real estate transactions and falsely promised to use certain funds provided by Stillwater to renovate houses involved in those transactions. In some of these transactions, Townsend also retained funds as purported "consulting fees" when no services were performed. Schottenstein pleaded guilty in May 2008 and was sentenced to 42 months in prison, followed by three years of supervised release. Lieberman pleaded guilty in April 2008 and was sentenced to 16 months in prison, followed by three years of supervised release. Sentencing for Townsend has not yet been scheduled.