Real Estate Investor Sentenced for Mail Fraud

NEW ORLEANS—MICHAEL B. SMUCK, age 64, of New Orleans, Louisiana, was sentenced in federal court today by U.S. District Judge Lance M. Africk to 30 months in prison for mail fraud, announced United States Attorney Jim Letten. In addition to the term of imprisonment, Judge Africk imposed two years of supervised release following the term of imprisonment, during which time the defendant will be under federal supervision and risks an additional term of imprisonment should he violate any terms of his supervised release. SMUCK was also ordered to pay restitution in the amount of $789,920.97 to investors.

According to court documents, SMUCK owned and operated MBS Realty Investors, LTD and MBS Management Services, Inc., located at One Galleria Blvd, Suite 1950, Metairie, Louisiana. One of the real estate investment partnerships operated by SMUCK, MBS Realty Investors, LTD and MBS Management Services, Inc. was called MBS-Briar Meadows, LTD which owned an apartment community in Houston, Texas. Beginning on or about May 30, 2007 and continuing until on or about September 29, 2007, SMUCK devised a scheme to defraud in order to obtain at least $3,477,980.00 in investor property to pay company debts unrelated to the Briar Meadows partnership.

SMUCK sold the property known as Briar Meadows and misappropriated the funds from the sale to pay other company debts rather than disburse those sale proceeds to the investors of Briar Meadows. SMUCK continued to send documentation to investors in Briar Meadows in order to give the fictitious appearance that the investment property was still active.

The case is being investigated by the United States Postal Inspection Service and the Federal Bureau of Investigation. The case is being prosecuted by Assistant United States Attorney G. Dall Kammer.