Four Charged with Running $13 Million Loan Fraud Scheme
|U.S. Attorney’s Office August 18, 2011|
CINCINNATI—A federal grand jury has indicted four people who ran a Cincinnati real estate business known as American Equity Group (AEG) with fraudulently obtaining more than $13 million in loans through a loan fraud scheme that targeted homeowners or builders in or near foreclosure. The scheme allegedly caused a loss of $6 million.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Ohio Attorney General Mike DeWine, and Edward J. Hanko, Special Agent in Charge, Federal Bureau of Investigation (FBI), announced the indictment today. These agencies are members of the Greater Cincinnati Mortgage Fraud Task Force.
The indictment charges Adam Moellers, 33; Gary Dailey, aka Gary Klump, 32; Perry Bensick Jr., 35; and Gary Dailey’s mother, Mary Dailey, 50, all of Cincinnati, with wire fraud, mail fraud, and conspiracy.
The indictment alleges that the four worked together at AEG, which also operated under the names Equity Financial Solutions and Equity Finance Group, and carried out the scheme between July 2006 and October 2007.
According to the indictment, they conspired to locate distressed properties that were in or nearing foreclosure or that needed to be sold quickly. They would typically promise the sellers that they could continue to live in the property as a renter then purchase the property back after AEG assisted the homeowner with repairing their credit. The defendants are accused of finding “investors” to purchase the property, often as inflated values, with the promise that the mortgage would be paid through rent payments from the original seller and that the original seller would purchase the property back within a short period. After the properties were stripped of any equity, they would be back in foreclosure again, and the distressed homeowners wouldn’t have any standing in court because they no longer owned the properties. The “investors” who bought the houses were left with the debt.
In other circumstances, the distressed properties were new homes that were constructed by new home builders, but had not been purchased yet. The four would find “investors” to purchase the property, often at inflated values, with the promise the property would quickly be resold or rented.
The indictment alleges that they fraudulently secured loans totaling more than $13 million and involving 18 properties in Ohio, Indiana, Michigan, and Georgia. They allegedly created loan applications with fraudulent statements about the borrower’s income, employment, assets and liabilities, forged signatures on the applications and submitted fabricated supporting documentation to lenders.
Each count is punishable by up to 20 years in prison, three years of supervised release and a fine of $250,000 or twice the loss.
“Loan fraud can devastate an individual’s bank account, undermine financial institutions, and devalue properties in entire neighborhoods,” Stewart said. “We will continue to build collaborations with law enforcement to investigate and prosecute fraud.”
“As a result of the hard work of the task force, this indictment will help protect Ohioans and bring criminals to justice,” Attorney General DeWine said. “Foreclosure rescue scams remain a major threat to the financial security of Ohio homeowners, and we are committed to doing all we can to put an end to this type of fraud. These operations make false promises to vulnerable homeowners and take money without providing any real help.”
The four will be summoned to federal court for their initial appearance and arraignment
An indictment is merely an accusation. Defendants are presumed innocent unless and until proven guilty in court.