White Collar Crime News

Title agent indicted for mortgage fraud involving fake resort August 12, 2009

Government press releases never read well for the defendant.  Sometimes people come up with dumb scams that have no chance of success and others are involved in complex business deals that fail.  Even if there is no criminal activity, the Government will allege otherwise and it won’t be until you see the discovery and talk to your client that you see the other side of the story.

This press release is too vague for me to figure out which type of case this is.  Based on what is here however, I can at least see some defenses here.  When you combine a failed business with cooperating witnesses who will say anything to stay out of prison (or avoid a long stretch) then you will get a nice story about some horrible scammers.  This is why it is so important for an attorney to follow the money.  Blowing the money on bad business deals is the sign of a civil case while blowing the money on luxury items can be the sign of a white collar crime case.

BALTIMORE, MD—A federal grand jury has indicted Jay Leonard, age 43, of Alexandria, Virginia, today for mail and wire fraud in connection with scheme involving the fraudulent purchase of 25 properties in Maryland, the District of Columbia and Virginia and a scheme to solicit investors for a resort property that did not exist, announced United States Attorney for the District of Maryland Rod J. Rosenstein. The indictment was returned on August 11, 2009 and Leonard is scheduled to have his initial appearance in U.S. District Court in Baltimore today at 3:00 p.m.

According to the nine count indictment, February 2006 through September 2008, Leonard, a title agent, working with co-conspirator Osman Al-Bari and others, solicited funds from victims in Maryland for a $10 million spa resort in Spotsylvania County, Virginia, that Leonard, Al-Bari and others claimed they were developing. According to the indictment, Leonard used his position as title agent and falsely claimed that he was doing a closing for the spa resort. Based on those allegedly false representations, the Maryland victims transferred $478,000 to Leonard’s bank accoung.

The indictment further alleges that, working with Osman Al-Bari, Timothy Reed, Terrence White and others, Leonard served as the title agent for several straw purchasers who bought at least 20 properties in Maryland, Virginia and Washington, D.C. For example, the indictment alleges that co-conspirator Sabrina Weinberg purchased four properties for Al-Bari and others and was paid approximately $40,000 for the purchases. Weinberg and other straw purchasers used fraudulent loan applications and closing documents to qualify for the mortgages and to disguise the true buyer of the property. According to the indictment Jay Leonard had Weinberg sign false affidavits claiming that each property was her primary residence. Further, the indictment alleges that Leonard kicked back a portion of the settlement funds from the straw buyer properties, disguising the wire transfers on the closing documents as reimbursement for alleged “renovations” performed on the properties prior to closing by Brotherly Investment Group, a company owned by Al-Bari, Reed and White. The indictment alleges that for the Weinberg properties alone, Leonard sent wire transfers totaling $515,820 to Al-Bari, Reed and White.

According to the indictment, almost all of the properties Leonard was involved with went into foreclosure, causing actual losses of over $7 million.

Leonard faces a maximum sentence of 30 years in prison for each of four counts of mail fraud and five counts of wire fraud.