Construction Loan and Mortgage Fraud Conspiracy Guilty Plea

GREENVILLE—United States Attorney Thomas G. Walker announced that in federal court today, JUSTIN LEE ROOKS, 31, of Loris, South Carolina; MICHAEL THOMAS BARTLETT, 46, of Myrtle Beach, South Carolina; and ROBERT HAROLD MELVILLE, JR., 50, of Lake Waccamaw, North Carolina, pled guilty before Senior United States District Judge Malcolm J. Howard for their involvement in a construction loan and mortgage fraud conspiracy. ROOKS and BARTLETT pled guilty to conspiracy to commit mail, wire, and bank fraud, in violation of Title 18, United States Code, Section 1349. MELVILLE, a former attorney, pled guilty to conspiracy to commit bank and wire fraud, in violation of Title 18, United States Code, Section 1349.

The criminal information in the case against ROOKS and BARTLETT alleges that between May of 2004 and August of 2008 ROOKS, BARTLETT, and others conspired to defraud banks and lenders in connection with the purchase, development, and resale of properties in Columbus, Brunswick, and New Hanover counties. It is further alleged that the conspirators solicited individuals at seminars in Raleigh and elsewhere to allow construction loans to be obtained in the names for the benefit of the conspirators in exchange for cash. The conspirators told the buyers that the buyers would not have to make a down payment or interest payments on the loans, and that the properties purchased in their names would be sold within 12 months. If the property could not be sold in 12 months, the conspirators were supposed to buy the properties back.

The conspirators in fact enticed the buyers to participate in the transactions and engaged in various actions to make it appear to the banks and lenders that the buyers were qualified for the loans. Among other things, the information alleges that the conspirators deposited money into the bank accounts of the buyers to make it appear that they had sufficient assets to conduct the transactions. To close the loans, the conspirators also referred the buyers to MELVILLE, who was at that time a North Carolina attorney who practiced real estate law. MELVILLE participated in the conspiracy by engaging in actions that made it appear to the banks and lenders that the buyers had given down payment money at the time of closing when, in fact, the buyers did not bring such money.

The banks and lenders who loaned funds to the buyers were not informed of the cash kickbacks to the buyers by the conspirators. The banks and lenders were also not informed that the buyers did not in fact have the cash to close the transactions, and that the down payment money, if any, was provided by the conspirators.

Ultimately, according to the Informations, the conspirators were unable to sell many of the properties purchased in the names of the buyers. The buyers did not have the means to repay all of the loans obtained in the names of the buyers and, as a result, many of the loans went into default. The banks and lenders were forced to sell the properties at a loss, resulting in substantial losses.

The sentencings in each of these cases have been set for Judge Howard’s March 2013 term of court. At sentencing each of the defendants face a maximum of 30 years in prison for their role in the conspiracy, as well as up to $1 million in fines, three years of supervised release, and mandatory restitution.

Investigation of this case was handled by the Internal Revenue Service Criminal Investigation and the Federal Bureau of Investigation. The case is being prosecuted by Assistant United States Attorney William M. Gilmore.