Akron Man Charged in $15 Million Fraud Scheme

A three-count information was filed against Andrew D. Norman, accusing him of taking part in a $15 million fraud scheme, said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio.

Norman, 34, of Akron, Ohio, is charged with two counts of conspiracy to commit bank fraud and false statements to influence a bank to make a loan and one count of filing a false tax return in connection with a mortgage fraud scheme and a scheme to defraud various banks, a scheme to defraud two elderly investors in a separate transaction, and failure to report his income derived from the scheme against those investors.

The first conspiracy count of the information charges that Norman as well as his business partner (referred to as J.A.H., not charged herein), conspired with a co-conspirator known as J.C. (also not charged) in procuring “straw buyers” and submitting false loan documents to banks to purchase J.C.’s lots in Florida (which had already been inflated in value as part of a land flip) in a mortgage fraud scheme. J.C., with assistance from Norman and J.A.H., perpetrated a large mortgage fraud scheme involving numerous straw buyers, who essentially sold their good credit score to J.C. in order for J.C. to secure loans, through straw buyers’ names, for property in Florida. J.C. promised the straw buyers that if they signed the loan application and paperwork, J.C. would pay them an inducement amount. J.C. then promised them that J.C. would make all the mortgage payments for these straw buyers and would make any down payments that were necessary, and that, once the property was developed, it would be sold and that they would split the profits half and half. On the face of it, the straw buyers would receive money up front from J.C., make no payments out of pocket and receive 50% of the profit from the sale of the property at the tail end of the transaction. J.A.H. and Norman were mentored by J.C. in how to recruit and use straw buyers. They assisted J.C. in using their brokerage company, V.P. Equity, located in the Akron, Ohio area, to prepare and submit falsified loan documents to the banks, which fraudulently inflated the income and assets of the straw buyers to qualify them for these loans. Ultimately, J.C. failed to make the mortgage payments on these loans, resulting in a loss of approximately $13.1 million.

In the second conspiracy scheme, Norman, as well as J.A.H., (not charged herein ) conspired with J.C. (not charged herein), and others, to defraud two elderly individuals by selling them a piece of Florida property for $7 million. Moments before the sale, J.A.H. and Norman, with J.C.’s help, bought the property, through their partnership, 104 Investments, from the original seller and inflated its value by approximately $2.55 million. They then sold this property to these elderly individuals, who were told that they were buying the property from the original seller. These elderly victims were never told of the last minute “flip” and that they were actually buying the land from Norman, J.A.H. and 104 Investments. J.A.H. and Norman, and their 104 Investments business partner, Robert Jason Workman, received approximately $2.55 million from this gain, and funneled portions out to themselves and paid $690,000 to J.C. as a kick-back for setting up this fraudulent scheme, which they fraudulently deducted as a business expenses.

Norman is charged in a third count of the Information with filing a false individual tax return for 2006 because he underreported his portion of the income he received from this transaction because he took a fraudulent business deduction for the funds paid to J.C. as a kick back for setting up this scheme. Workman has previously been charged with filing a false individual tax return for 2006 for underreporting his portion of the $690,000.00 received by the 104 Investments partnership, which was used to then pay J.C., because he took a fraudulent business deduction for his share (1/3) of these proceeds. At the time Workman received the proceeds from this transaction in 2006, he was not charged with being involved in the fraudulent scheme to defraud the elderly victims. However, by the time he had filed his 2006 tax return in 2007, Workman was aware that funds paid out to J.C. were not business expenses. Workman’s case has been assigned to the Honorable John Adams, U.S. District Court for the Northern District of Ohio, in Akron, Ohio, and is pending arraignment.

A series of straw buyers have been charged to date and entered guilty pleas to a one count Information charging Conspiracy to Commit Loan Fraud and Bank Fraud. The cases are listed below and are also pending sentencing before the Honorable John Adams.

Dr. Robert Rosenstein, a straw buyer who caused a loss of $811,087.00 to the First Horizon Bank and a loss of $1,163,148.69 to National City Bank, for total losses of $1,974,235.69.

Dr. Stanley Beekman, a straw buyer who caused a loss of $364,533.00 to the First Horizon Bank and a loss of $612,000.00 to National City Bank, for total losses of $976,533.00.

Lauren May, a straw buyer who caused a loss of $330,000.00 to the IndyMacBank.

David S. Yamokoski, a straw buyer who caused a loss of $942,969.00 to the Coast Bank of Florida and a loss of $867,000.00 to National City Bank, for total losses of $1,810,819.00.

An information is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt. If convicted, the defendant’s sentence will be determined by the Court after review of factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense and the characteristics of the violation. In all cases, the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.

The case is being prosecuted by Assistant U.S. Attorneys Christian H. Stickan and Henry F. DeBaggis, following investigation by agents of the IRS-CI and FBI, Akron Office.