A Maryland-based limited liability company (LLC) that offered mortgage holders a "dream come true" has allegedly committed business fraud. According to prosecutors, the business allegedly lied to investors and went on apparent spending sprees to give the illusion of profitability. The mortgage company offered to pay off mortgages of customers in exchange for an up-front payment of at least $50,000, as well as an administrative fee that normally amounted to as much as $5,000. These investors were promised the company would pay their mortgages within seven years.
Authorities, however, claim the company never paid back most of these mortgages. Instead, they allegedly used investments to pay off older mortgages, paid high salaries to a select few employees and made substantial donations -- all of which the prosecution believes was a ruse to convince investors the company was doing well.
Authorities claim the company went further in the alleged illusion, booking luxury accommodations at major sporting events like the 2007 NFL Super Bowl and the NBA All-Star game. Authorities also allege the company used investor funds to pay off debt accrued from a previous failed venture involving ATMs.
The company is accused of defrauding about 1,000 investors for as much as $78 million. While three defendants have already been convicted for money laundering, fraud conspiracy and wire fraud, the company's founder is awaiting his trial in early November, which prosecutors estimate to take about six weeks. While the allegations against them are serious, all those facing charges are considered innocent until proven guilty in a court of law.
Source: fredericksburg.com, "Dream Homes founder faces trial Tuesday," Cathy Jett, Oct. 25, 2011