CHARLOTTE – Five people were sentenced this month for their roles in real estate and financial fraud activities that were uncovered in the massive federal investigation dubbed Operation Wax House, the U.S. Attorney’s Office in Charlotte announced Thursday.
Most recently, Matthew Newland of Iowa and Lorie Dooley of Charlotte were sentenced Jan. 27 by Senior U.S. District Judge Graham C. Mullen.
Newland, 41, received 13 months in prison followed by one year of supervised release. He pleaded guilty in June 2013 to a federal charge of conspiring to commit bank fraud under the Racketeer Influenced and Corrupt Organizations Act, or RICO.
Dooley, 50, was sentenced to 46 months in prison followed by three years of supervised release. She pleaded guilty to three RICO charges of conspiracy to commit bank fraud, wire fraud, and money laundering conspiracy in January 2014. She also had been indicted on a count of bank bribery conspiracy.
The others sentenced were:
- Travis Bumpers, 38, of Charlotte, on Jan. 20 to 66 months in prison and three years of supervised release. Bumpers pleaded guilty in March 2013 to RICO conspiracy to commit securities fraud, bank fraud, wire fraud, and money laundering conspiracy.
- Ralph Johnson, 37, of Charlotte, on Jan. 8 to 27 months in prison and two years of supervised release. He pleaded guilty in June 2013 to RICO conspiracy to commit bank fraud, wire fraud, and money laundering conspiracy.
- Benjamin Clarke, 41, of Atlanta, on Jan. 8 to an eight-month split sentence, meaning he can serve up to half the term outside of prison, followed by two years of supervised release. He pleaded guilty in June 2013 to bank fraud.
According to an April 2013 indictment, the five were among 26 charged in various conspiracies, including mortgage fraud, investment fraud, securities fraud, money laundering and racketeering. Four people were identified as the leaders, and some of their activities involved inducing more than 50 people, targeting professional athletes and doctors, to invest more than $27 million in nonexistent real estate developments, investment firms and car dealerships.
In addition, the defendants were part of a house-flipping scheme in which sellers or homebuilders would agree with members of the group to sell their homes at the true price, but instead a “straw buyer” would obtain a loan up to hundreds of thousands of dollars higher than that price based on fraudulent documentation. Those involved would split the difference.
The convictions resulted from the larger Operation Wax House, an investigation into mortgage fraud and other crimes in which 91 people have been charged. All but two, who are international fugitives, have either pleaded guilty or been convicted. The agencies involved in the investigation are the Charlotte Division of the FBI and the Criminal Division of the IRS for the Financial Fraud Task Force, along with the Securities Division of the N.C. Secretary of State.
One of the fugitives was identified as a leader in the April 2013 indictment that charged those sentenced this month.
The indictment identified Ramin Amini, 46, last known to be living in Iran, along with Victoria Hunt, 37, of Charlotte; Carrie Tyson, 60, of Winterville; and Tyson’s son James Tyson Jr., 33, of Senegal, as being the leaders of the enterprise.
Prosecutors charged that Newland operated as a “promoter” in the conspiracy and received more than $400,000 in kickbacks for his role. He also acted as a seller in one transaction, allowing about $240,000 in kickbacks to be paid out of mortgage loan proceeds to his co-conspirators.
Dooley was also identified as a promoter, receiving $25,000 in kickbacks. In addition, she was charged with bribing a bank employee to manufacture a letter of credit and then, having learned that the employee pleaded guilty, obstructed justice by trying to threaten and intimidate the employee, according to the indictment.
Bumpers was identified as a promoter in both the mortgage and investment fraud schemes, including arranging for straw buyers, providing down payments and receiving $800,000 in kickbacks.In addition, he was charged with being one of a group that induced victims to invest in New Century Homes of the Carolinas by taking out loans of up to hundreds of thousands of dollars to lease or purchase construction equipment for the company. New Century then kept the equipment, leaving the victims with the loan debt.
Johnson was identified as a promoter, helping to arrange fraudulent mortgage transactions and providing straw buyers, for which he received $360,000 in kickbacks, according to the indictment. Clarke acted as a buyer for two properties, receiving about $200,000 in kickbacks.
Some of the transactions highlighted in the indictment gave details as to how the operation worked:
- In June 2006, a home at 425 Annaberg Lane in Monroe was purchased in the name of Kim Perry for an inflated price of $278,000, using $277,270 in loans. Members of the organization falsified information on the buyer, the down payment, earnest money, and Perry’s employment and assets. The Housing and Urban Development (HUD) closing document listed a disbursement of $41,660 to Quality Home Builders, controlled by Johnson and William Brown, which the indictment said was a kickback.
- In August, 2006, Clarke was named as the buyer of 9609 Tralee Court, Matthews, at an inflated price of $556,000. The closing documents listed a disbursement of nearly $68,000 to First Capital Development Group LLC, which the indictment said was a kickback to Clarke through his company. Clarke let the payments lapse on the home, which went into foreclosure and was resold for $253,000, about $300,000 less than the inflated price at which he bought it.
- In February 2007, 2718 Crane Road, Waxhaw, was bought under the name of Hillian for an inflated price of $1.8 million with loans totaling $1.6 million. The indictment says that $14,855 in fraudulent proceeds was distributed to Dooley, and $5,000 to her mother. The home went into foreclosure and was resold for $685,000, more than $1.1 million less than the inflated purchase price.
- In March 2007, 1021A W. Fourth St., Charlotte, was bought at the inflated price of $457,000 with loans of $455,000. The HUD statement listed disbursements of $59,290 to Pinnacle Investments as a design fee, of which $48,336 was received by Johnson and Brown, and $44,000, which was listed as a design fee to Affiliated Capital and Real Estate, of which $33,000 was given to Newland.
- In May 2007, 1021B W. Fourth St., Charlotte, was bought at an inflated price of $800,000, using $715,000 in loans. Following the closing, $58,793 was distributed to Johnson’s Pinnacle Investments and $60,000 to Newland’s Affiliated Capital as a design fee. The home went into foreclosure, after which it sold for $173,000.
- Also in May, 1023A W. Fourth St., Charlotte, was purchased in Clarke’s name for an inflated price of $800,000, with loans of $758,000. After the closing, $140,920 was distributed to Clarke’s First Capital Development Group LLC and $149,500 to Newland’s Affiliated Capital as a design fee. The home went into foreclosure, then sold for $170,000.
- In July 2007, 8101 Skycroft Commons Drive, Waxhaw, was bought for an inflated price of $1.5 million, of which $1.35 million was financed through loans. Bumpers and others received a kickback totaling $166,000 through New Century Development. The home went into foreclosure, after which is sold for $658,500, which is $841,500 less than the inflated purchase price.
- Also in July 2007, 8304 Skye Lochs Drive, Waxhaw, was purchased for $1.4 million, of which $1.26 was financed from loans. Bumpers provided down payment funds through a wire from New Century Homes, although closing documents stated that the “buyer” provided the funds. Bumpers received $62,000 from closing distributions. The home was foreclosed upon, and later sold for $553,000, or $847,000 less than the inflated purchase price.
- In August 2007, 1625 Lookout Circle, Waxhaw, was purchased for $1.45 million, with loans totaling $1.3 million. Bumpers wired $170,000 from New Century’s account to the account of the straw buyer to indicate the down payment. Bumpers and John McDowell then received $441,500 in a disbursement to New Century Homes. The home went into foreclosure, and sold for $512,000.
- Also in August, 1021A W. Fourth St., which organization members had bought in March, was repurchased at an inflated price of $800,000, with loan proceeds totaling about $719,000. The HUD closing form listed $197,736.27 as cash due seller, when in fact it was distributed to Johnson and Brown through Pinnacle Investments. The home went into foreclosure, then sold for $190,000.
- That same month, 1023B W. Fourth St. was purchased for $810,000, of which $729,000 was financed through loans. Following the closing, $92,309 was disbursed to Johnson and Brown’s Quality Home Builders LLC as a kickback and $165,000 was distributed to Newland’s Affiliated Capital and Real Estate Inc. The home went into foreclosure, then resold for $155,000.
- In November 2007, according to the indictment, Dooley bribed a bank employee to supply a false letter of credit from Bank of America in an attempt to obtain financing from other financial institutions. On Nov. 7, a $68,000 bribe was wired to an account in the name of Savvy Records Inc., which was controlled by Dooley. On Nov. 16, Dooley withdrew $63,000 from the Savvy Records account, obtained a cashier’s check for $55,000 to cover the employee’s bribe, and kept the remaining $8,000.