04/16/2009

News / SENIOR LOAN OFFICER AND CONSPIRATOR PLEAD GUILTY IN MORTGAGE FRAUD SCHEME THAT TARGETED VICTIMS THROUGH LOCAL TV ADS

Defendants Agree to Forfeit Over $2 Million

GREENBELT, MD—Cheryl Brooke, age 52, of Upper Marlboro, Maryland, and Winston Thomas, age 43, of New Carrollton, Maryland pleaded guilty today to their participation in a scheme in which they offered to help financially-vulnerable individuals save their homes from foreclosure, and instead defrauded homeowners and mortgage lenders, announced United States Attorney for the District of Maryland Rod J. Rosenstein.

“Cheryl Brooke and Winston Thomas stole the homeowners’ equity by inducing financially- vulnerable homeowners to sell their properties and convert the sale proceeds to the use of the conspirators,” said U.S. Attorney Rod J. Rosenstein. “The mortgage fraud conspiracy cases that we are prosecuting in Maryland should serve both to hold criminals accountable and to warn homeowners about the many smooth-talking con artists who take advantage of people who fall behind on their mortgage payments.”

According to their plea agreements, from at least 2004 until May 2008, a conspirator aired television advertisements that targeted financially-vulnerable individuals, representing that he could improve their credit, save their homes from foreclosure and assist them with bankruptcy. Viewers who called the toll-free number were scheduled to meet with the conspirator. At the meetings, they were solicited to purchase a variety of for-fee services for reducing debt, as well as a pre-paid legal plan, income tax return preparation services and bankruptcy petition preparation.

Thomas, who was then a senior loan officer with a mortgage lender, and Brooke specifically targeted individuals who owned and had equity in their homes, but were facing foreclosure on their homes because of their inability to make monthly mortgage payments. The defendants fraudulently represented to the homeowners that their “ lease/buy-back program” would help the homeowners to keep their homes. The homeowners were told that the “good credit” of another co-conspirator would be used to temporarily refinance their homes, that they had to sign their homes over to such co-conspirator and that they could repurchase the homes in roughly one year, or once they regained their financial footing. During the interim, they could remain in their homes by paying “rent” and fees to the co-conspirator by having their bank accounts directly debited by an account belonging to Brooke’s company “In the House Technologies” (IHT). Brooke allowed the IHT account to be used to deposit the proceeds of the equity-stripping scheme.

Thomas and other co-conspirators failed to inform the homeowners of the particulars of how the lease/buy-back program worked and misrepresented the amount of money that the homeowners would receive at settlement, what would be done with any equity in the homes and the need to file for bankruptcy protection. In addition, in order to induce mortgage lenders to provide mortgage loans to purchase the homes, Thomas submitted false financial and employment information to mortgage lenders. After financing was obtained to purchase the properties, Brooke would file motions to dismiss the homeowners’ bankruptcy cases so that the settlements could take place.

Finally, Thomas failed to file individual federal income tax returns for the years 2004 to 2006, resulting in a total tax loss of $57,830.
“IRS-Criminal Investigation is committed to aggressively pursuing those taxpayers who willfully fail to file their tax returns. All financial crimes add to the underground economy, erode the integrity of our tax system and threaten the financial health of our communities." stated C. Andre' Martin, Internal Revenue Service-Criminal Investigation Special Agent in Charge. “The IRS-Criminal Investigation is committed to pursuing individuals who create such havoc.”
Brooke and Thomas face a maximum sentence of 20 years in prison for the conspiracy to commit wire fraud. Brooke also faces a maximum of five years in prison for bankruptcy fraud and Thomas faces a maximum sentence of one year in prison for failure to file a federal income tax return. U.S. District Judge Deborah K. Chasanow has scheduled sentencing for Brooke and Thomas on July 31, 2009 at 10:00 a.m. and 2:00 p.m., respectively. As part of their plea agreements, Brooke and Thomas each agree to the entry of a forfeiture order of $2,228,878 and further agree that at least this amount was generated as proceeds of the criminal activity.

United States Attorney Rod J. Rosenstein thanked the U.S. Postal Inspection Service, the Federal Bureau of Investigation, the Internal Revenue Service- Criminal Investigation and the U.S. Trustee’s Office - U.S. Bankruptcy Court for their investigative work. Mr. Rosenstein commended Assistant United States Attorneys Gina L. Simms, Stacy Dawson Belf and Jonathan Su, who are prosecuting the case.


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