A federal jury has convicted the leader of a mortgage fraud scheme that guaranteed to pay off homeowners' mortgages but failed to fulfill this promise.
Andrew Williams Jr., who owned and founded Metro Dream Homes, was charged with fraud conspiracy, 15 counts of wire fraud and conspiracy to commit money laundering.
According to evidence presented in court, Williams worked with conspirators to allegedly recruit individuals to participate in a fraudulent mortgage payment scheme called the “Dream Homes Program.” As part of this scheme, homeowners were told that if they made an initial investment of at least $50,000, plus an additional $5,000 that served as an administrative fee, the Dream Homes Program would pay for their monthly mortgages. The homeowners were also allegedly told their mortgages would be paid off within five to seven years through this scheme.
“Metro Dream Homes was an egregious fraud scheme, and an excellent example of the principle that financial schemes that sound too good to be true are usually scams,” said Rod Rosenstein, U.S. attorney for the District of Maryland.
Representatives of the program told investors that their initial investments would be used to fund money into automated teller machines, flat-screen televisions that would show paid businesses advertisements and electronic kiosks that sold goods. However, the conspirators never advised investors that these “gimmicks” failed to generate any income for Metro Dream Homes.
The defendants actually used these funds from late investors to pay the mortgages of investors that signed up for this scam when it initially began, the Department of Justice said.
As a result of the scheme, more than 1,000 investors in the Dream Homes Program invested $78 million.
Meanwhile, Metro Dream Homes supposedly made presentations at luxury hotels in New York, Los Angeles and Washington in order to show investors that the program was successful.
Investors were unaware that the conspirators were using their money to pay for MDH salaries that were as high as $200,000, the employment of chauffeurs to drive luxury cars used by the defendants, travel accommodations to the 2007 Super Bowl and National Basketball Association All-Star Game and to pay off prior investors that were part of a Ponzi scheme. Additionally, $50,000 was sent to charitable organizations to promote that MDH was a successful business.
“This case shows that the appearance of success can be a mask for a tangled financial web of lies,” said Jeannine Hammett, special agent in charge for the Internal Revenue Service. “Ponzi schemes can thrive for a time on false claims about how the money is being invested and where the returns are coming from. But that time is gone, and as this verdict shows, it's time for those responsible to face judgment.”
Michael Hickson, the chief financial officer of MDH; Isaac Smith, the president of MDH; and Alvita Gunn, vice president of operations, have already been sentenced for their roles in this mortgage fraud scheme.
