Nine More Members of Racketeering Enterprise Indicted on Investment Fraud, Mortgage Fraud, and Related Charges

CHARLOTTE, NC—A federal superseding indictment unsealed today in U.S. District Court charged nine additional defendants in Charlotte and elsewhere with racketeering, investment fraud, mortgage fraud, bank bribery, and money laundering, announced the U.S. Attorney’s Office for the Western District of North Carolina. This latest round of criminal charges resulting from Operation Wax House, a mortgage fraud investigation which began in the Western District of North Carolina in 2007, brings the total number of defendants charged to date to 92, of which 66 have pleaded guilty.

John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation, Charlotte Division; Jeannine A. Hammett, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation (IRS-CI); and Elaine Marshall, North Carolina Secretary of State, join the U.S. Attorney’s Office in making today’s announcement.

The superseding federal racketeering indictment was returned by a federal grand jury sitting in Charlotte on April 18, 2013, and remained sealed until today. The superseding indictment adds nine defendants to the existing charges, bringing to 26 the total number of individuals currently charged as part of a criminal organization (the “enterprise”) that operated principally in the cities of Charlotte and Waxhaw, North Carolina, and stole more than $75 million from investors and mortgage lenders.

According to allegations contained in the unsealed indictment:

The enterprise, which operated from about 2005 through 2012, engaged in an extensive pattern of racketeering activities, consisting of investment fraud, mortgage fraud, bank fraud, money laundering, and distribution of illegal drugs. Members of the enterprise also bribed bank officials.

In the investment fraud portion of the racketeering activities, the co-conspirators targeted professional athletes and doctors as well as their personal and professional acquaintances and convinced them to invest in a series of sham corporations controlled by the enterprise. For example, members of the enterprise told potential investors that one of the sham corporations, PEI, was a commodities trading company that would broker deals for the supposed export-import of various commodities like rice-trading and gold and diamond mining in Africa. In truth and fact, instead of investing the victims’ money as promised, the enterprise used the funds obtained through PEI to support its members’ lifestyles and to make Ponzi-style payments to other victims. The co-conspirators stole over $27 million from more than 50 investor victims, including money that the investor victims were induced to obtain as loans from financial institutions.

The enterprise’s mortgage fraud operations involved acquiring luxury homes in neighborhoods in Charlotte and Waxhaw. One member of the enterprise would agree with a builder to purchase a property at the “true price.” The enterprise would then arrange for a buyer to purchase the property at an inflated price. In most circumstances, the buyer would agree to purchase the property in his or her own name and sign whatever documents were necessary, in exchange for a hidden monetary kickback. The builder would sell the property at the inflated price, the lender would make a mortgage loan on the basis of that inflated price, and the difference between the inflated price and the true price would be extracted at closing by the enterprise.

The vast majority of the houses purchased as part of the enterprise’s mortgage fraud operations subsequently fell into foreclosure, resulting in losses of hundreds of thousands of dollars in most instances. Over the course of the conspiracy, members of the enterprise purchased four condos in one building for inflated prices, resulting in an aggregate loss on those units of approximately $2 million.

Members of the enterprise also engaged in bank bribery conspiracies by bribing bank employees to cash checks received from fraudulent mortgage transactions carried out by the enterprise and to deposit checks in a manner designed to further conceal the true distribution of the proceeds and to supply false letters of credit in the names of local banks in an attempt to obtain financing from other financial institutions. In one instance, a bank employee was paid a $55,000 bribe for preparing and providing a false letter of credit.

The racketeering activities of the enterprise also included distribution of illegal drugs. For example, members of the enterprise transported truckloads of marijuana from Texas and elsewhere to North Carolina, using companies utilized in both the drug trafficking and mortgage fraud operations and trucks controlled by members of the enterprise and others.

Defendants added in this superseding indictment are:

• William Brown, 34, of Matthews, North Carolina, is charged with racketeering conspiracy and mortgage fraud. Role: Promoter and buyer. Status: In custody, pending release on conditions, following arrest and initial appearance.
• Benjamin Clarke, 40, of Smyrna, Georgia, is charged with mortgage fraud. Role: Buyer. Status: Released following arrest and initial appearance.
• Frank DeSimone, 40, of Charlotte, is charged with racketeering conspiracy, securities fraud, wire fraud to defraud investors, and money laundering. Role: Promoter. Status: To appear for an initial appearance pursuant to a summons.
• Lorie Dooley, 48, of Washington, D.C., is charged with racketeering conspiracy, mortgage fraud, and bank bribery. Role: Promoter. Status: To appear for an initial appearance pursuant to a summons.
• James E. Fink, 43, of Waxhaw, is charged with racketeering conspiracy and mortgage fraud. Role: Builder. Status: To appear for an initial appearance pursuant to a summons.
• Ralph Johnson, 35, of Charlotte is charged with racketeering conspiracy and mortgage fraud. Role: Promoter. Status: In custody pending detention hearing.
• Denetria Myles, 41, of Charlotte, is charged with racketeering conspiracy and mortgage fraud. Role: Promoter. Status: To appear for an initial appearance pursuant to a summons.
• Matthew Newland, 39, of Coralville, Iowa, is charged with racketeering conspiracy and mortgage fraud. Role: Promoter and seller. Status: Released following arrest and initial appearance.
• Nazeere Saddig, 40, formerly of Charlotte, is charged with racketeering conspiracy and mortgage fraud. Role: Promoter and buyer. Status: Fugitive.
• Additionally, Steve Jones, 44, of Waxhaw, previously charged with securities fraud, wire fraud to defraud investors, and money laundering conspiracy has now also been charged with racketeering conspiracy. Role: Promoter. Status: To appear pursuant to a summons.

Today, the U.S. Attorney’s Office also announced charges filed against two additional promoters in the mortgage and investment fraud scheme. They acknowledge taking part in the conspiracy and have agreed to plead guilty. They are:

• Waylon Long, 40, of Texas, is charged with mortgage fraud conspiracy and money laundering conspiracy. Role: Promoter. Status: To appear for initial appearance upon a summons.
• Melvin Moye, 34, of Charlotte, is charged with investment or securities and mortgage or bank fraud conspiracy. Role: Promoter. Status: Pleaded guilty and is awaiting sentencing.

Additionally, the U.S. Attorney’s Office announced that three of the original 17 defendants who were charged with racketeering conspiracy have pleaded guilty to those racketeering charges. They are:

• Travis Bumpers, 36, of Charlotte, pleaded guilty to racketeering conspiracy to commit securities fraud, mortgage fraud, wire fraud, and money laundering conspiracy. Role: Promoter. Status: In custody pending sentencing.
• Victoria Hunt, 36, of Rockville, Maryland, pleaded guilty to racketeering conspiracy, securities fraud, mortgage fraud, wire fraud to defraud investors, and money laundering. Role: Leader and promoter. Status: On house arrest pending sentencing.
• Purnell Wood, 41, of Holly Springs, North Carolina, pleaded guilty to racketeering conspiracy to commit mortgage fraud and money laundering. Role: Promoter. Status: Released pending sentencing.

The conspiracy to participate in the racketeering activities charge carries a maximum term of 20 years in prison and a $250,000 fine or twice the gross profits or other proceeds. The securities fraud charge carries a maximum term of 20 years in prison and a $250,000 fine. The bank fraud charge carries a maximum term of 30 years in prison and a $1 million fine. The wire fraud charge carries a maximum term of 20 years in prison and a $250,000 fine. The money laundering conspiracy charge carries a maximum term of 20 years in prison and a $500,000 fine or twice the amount of criminally derived proceeds. The bank bribery conspiracy charge carries a maximum term of five years in prison and a $250,000 fine.

An indictment is merely an allegation, and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law. In addition, the guilty plea of any other person is not relevant to the guilt of any indicted person.

Operation Wax House in the Western District of North Carolina is being handled by the Charlotte Division of the FBI, the Criminal Division of the IRS for the Financial Fraud Enforcement Task Force, and the Securities Division of the North Carolina Secretary of State. The prosecution for the government is being handled by Assistant United States Attorneys Kurt W. Meyers and Maria K. Vento and Special Assistant United States Attorney Kevin M. Harrington.

The President’s Financial Fraud Enforcement Task Force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch and, with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit www.stopfraud.gov.

The names and case numbers of all the defendants charged to date in Operation Wax House are listed below, organized by their alleged role in the scheme.

Attorneys and Paralegals

Crawford/Mallard, Michelle 3:11cr374

Gates, Christine 3:09cr100

Norwood, Kelli, 3:09cr162

Rainer, Demetrius 3:08cr239/241

Smith, Troy, 3:08cr264

Bank Insiders

Brown, Jamilia, 3:10cr124

Eason, Danyelle, 3:10cr116

Henson, Vic. F., 3:10cr124

Jackson, Mitzi, 3:11cr374

Ramey, Bonnie Sue, 3:10cr124

Real Estate Agents

Belin, Chris, 3:11cr374

Clark, Christina, 3:09cr44

Lee, Shannon, 3:12cr338

Pasut, Holly Hardy, 3:12cr331

Wolf, Nathan Shane, 3:12cr239

Wood, Gary, 3:09cr208

Builders and Sellers

Fink, James, 3:11cr374; 3:12cr239

Jackson, Jennifer, 3:09cr241

Smith, Kelvis, 3:12cr238

Viegas, Jeffrey, 3:12cr298

Wittig, Mark, 3:12cr335

Wood, Gary, 3:09cr208

Facilitators and Financiers

Hickey, Denis, 3:09cr103

McClain, Landrick, 3:10cr124

Mitchell, Ann Tyson, 3:12cr239

Panayoton, Sherrill, 3:11cr176

Taylor, Alicia Renee, 3:10cr124

Wilson, Willard, 3:09cr161

Buyers

Banks, Arketa, 3:12cr297

Hillian, Kirk, 3:12cr83

Mathis, Charles, 3:10cr1

Mobley, Sarena, 3:10cr124

Moore, George, 3:12cr337

Richards, Dan, 3:10cr119

Smith, Kevin, 3:12cr341

Tyler, Glenna, 3:11cr200

Mortgage Brokers

Bradley, Bonnette, 3:12cr299

Clarke, Linda, 3:10cr120

Flood, Ericka, 3:10cr124

Goodson-Hudson, Crystal, 3:12cr339

Mahaney, Robert, 3:12cr34-0

Scagliarini, Coley, 3:11cr374

Staton, Walter, 3:10cr113

Vaughn, Danielle, 3:12cr329

Williams, Marcia, 3:12cr334

Williams, Sean, 3:12cr336

Woods, Joseph, 3:09cr178

Promoters

Amini, Ramin, 3:12cr239

Barnes, Vonetta Tyson, 3:12cr239

Brown, William, 3:12cr239

Bumpers, Travis, 3:12cr239

Carr, Stephen, 3:10cr124

Clarke, Benjamin, 3:12cr239

Clarke, Reuben, 3:10cr120

Coleman, Gregory, 3:10cr118

DeSimone, Frank, 3:12cr239

Dooley, Lorie, 3:12cr239

Hitchcock, Jimmy, 3:11cr374

Hubbard, Glynn, 3:12cr239

Hunt, Victoria, 3:12cr239

Hunter, Toby, 3:12cr239

Johnson, Ralph, 3:12cr239

Jones, Steven, 3:12cr239

Jones, Tyree, 3:10cr230

Long, Waylon, 3:12cr98

Marshall, Michael, 3:07cr283

McDowell, John, 3:12cr239

McPhaul, Elizabeth, 3:10cr114

Mehr, Kurosh, 3:12cr239

Mitchell, Ann Tyson, 3:12cr239

Moye, Melvin, 3:13cr99

Myles, Denetria, 3:12cr239

Newland, Matthew, 3:12cr239

Perry, John Wayne, Jr., 3:12cr239

Perry, Kim, 3:10cr25

Phillips, Rick, 3:10cr115

Saddig, Nazeere, 3:12cr239

Sharreff-El, Drew, 3:10cr124

Sherald, Kiki, 3:10cr117

Vaughn, Mary, 3:12cr329

Wallace, Jamaine, 3:12cr330

Wellington, William, 3:12cr333

Notary Public

Willis, Anthony, 3:09cr218

Appraisers

Darden, Clinton 3:10cr108

Simmons, Aaron, 3:09cr240

Snead, Todd, 3:10cr124

Staton, Lisa, 3:10cr113

Thorogood, Donte, 3:12cr239

Tyson, Carrie, 3:12cr239

Tyson, James, Jr. 3:12cr239

Tyson, James, Sr., 3:12cr239

Wellington, Phillip, 3:12cr332

Wood, Purnell, 3:12cr239