Woman sentenced to 10 years in mortgage fraud

A 47-year-old Charlotte woman has been sentenced to 10 years in prison for her part in a widespread $75 million mortgage fraud and money laundering scheme, the investigation of which became known as “Operation Wax House.”

Michelle Mallard pleaded guilty mid-trial in July 2013 to mortgage fraud conspiracy, money laundering conspiracy and embezzlement in violation of the wire fraud statute. Her prison sentence will be followed by two years of supervised release, according to the U.S. Attorney’s Office for the Western District of North Carolina.

According to court documents and last week’s sentencing hearing, Mallard served as a

closing attorney for the conspiracy, agreeing to use her law license to close fraudulent mortgage transactions primarily in south Charlotte and Waxhaw.

According to evidence introduced at Mallard’s trial, she accepted bogus checks to make it appear as though buyers had provided money when they had not and agreed to pay kickbacks to other members of the conspiracy. Evidence showed that Mallard was stealing money from her trust account when she began participating in the mortgage fraud. As a result, she was unable to pay off her client’s mortgage.

Mallard is one of 89 defendants who have either pleaded guilty or been convicted of charges stemming from the investigation. An additional two defendants are international fugitives.

The scheme involved members agreeing with a builder or seller to purchase a property at a set price, then arranging to have a “straw buyer” purchase it at between $200,000 and $500,000 more than the true price, according to the charges. A lender would make a loan based on the inflated prices, and the difference between the true price and inflated price would be distributed among participants after the closing.

The homes were in upscale neighborhoods, including Providence Downs South, Woodhall, Chatelaine, Skyecroft, Firethorne, Piper Glen and Stratford on Providence in southern Mecklenburg and northeastern Union counties.

Participants were accused of obtaining the mortgages through falsified documentation that:

• Misrepresented the buyer’s income, assets, place of employment, and intent to occupy the home.
• Failed to disclose the true agreed-upon price.
• Claimed the purchaser was making a down payment.
• Neglected to accurately account for the distribution of the mortgage loan proceeds.

When the housing bubble burst and property values deflated, many of the properties went into foreclosure, leaving lenders with properties that were worth substantially less than the amount of money they loaned for the purchase.

Those convicted include attorneys, paralegals, mortgage brokers, real estate agents, builders, bank employees, straw buyers, notaries public, financiers and promoters.

Before imposing the 10-year sentence, Chief U.S. District Judge Frank Whitney found that

Mallard had committed perjury and attempted to obstruct justice and that her testimony at a hearing in which she attempted to withdraw her guilty plea was “brimming with inconsistences and verbal gymnastics.”

Following the sentencing, Mallard was remanded into custody to immediately begin serving her sentence.

The two international fugitives related to the case are:

• Ramin Amini, 45, of Tehran, Iran, who was identified as a leader and promoter and is charged with racketeering conspiracy, mortgage fraud and money laundering conspiracy.
• Nazeere Saddig, 41, formerly of Charlotte, who was identified as a promoter and buyer and is charged with racketeering conspiracy and mortgage fraud.

The investigation was handled by the FBI’s Charlotte Division and the IRS’ Criminal Division as part of the Financial Fraud Enforcement Task Force, with assistance from the Securities Division of the N.C. Secretary of State.