U.S. District Judge Roger W. Titus sentenced Carole Nelson, age 53, of Washington, D.C., to 29 months in prison followed by three years of supervised release for money laundering in connection with her participation in a massive mortgage fraud scheme which promised to pay off homeowners’ mortgages on their “Dream Homes” but left them to fend for themselves. Judge Titus also entered an order requiring Nelson to pay restitution of $34,340,830.13.
The sentence was announced by United States Attorney for the District of
Maryland Rod J. Rosenstein; Special Agent in Charge Richard A. McFeely of the
Federal Bureau of Investigation; Acting Special Agent in Charge Eric C. Hylton
of the Internal Revenue Service-Criminal Investigation, Washington, D.C. Field
Office; Maryland Attorney General Douglas F. Gansler; and Inspector General Jon
T. Rymer of the Federal Deposit Insurance Corporation.
“Mortgage fraud is every bit as corrosive to society as street crime,” stated
Eric Hylton, Acting Special Agent in Charge, IRS-Criminal Investigation,
Washington D.C. Field Office. “This type of fraud has far-reaching economic
consequences and severely thwarts recovery from the foreclosure crisis, leaving
communities with inflated home values and financial institutions with
According to Nelson’s plea agreement, beginning in 2005, co-conspirators
targeted homeowners and home purchasers to participate in a purported mortgage
payment program called the “Dream Homes Program.” In exchange for a minimum of
$50,000 initial investment and an “administrative fee” of up to $5,000,
conspirators promised to make the homeowners’ future monthly mortgage payments
and pay off the homeowner’s mortgage within five to seven years. Dream Homes
Program representatives explained to investors that the homeowners’ initial
investments would be used to fund investments in automated teller machines
(ATMs), flat screen televisions that would show paid business advertisements,
and electronic kiosks that sold goods and services. To give investors the
impression that the Dream Homes Program was very successful, Metro Dream Homes
spent hundreds of thousands of dollars making presentations at luxury hotels
such as the Washington Plaza Hotel in Washington, D.C.; the Marriott Marquis
Hotel in New York, New York; and the Regent Beverly Wilshire Hotel in Beverly
In February 2006, the Dream Homes Program added a second program called “POS
Dream Homes” that offered similar promises of paying off investor mortgages in
five to seven years in exchange for an up-front investment of $50,000 or more.
Collectively, these programs had offices in Maryland, the District of Columbia,
Virginia, North Carolina, New York, Delaware, Florida, Georgia, and
Nelson was hired in December 2006 at an annual salary of $200,000 to get
investor contracts in order, including the creation of investor files. In March
2007, Nelson was named the chief financial officer of POS Dream Homes. At no
time did Nelson see any evidence of revenue being generated from investments in
ATMs and electronic billboards to pay off the investors’ mortgages.
Nelson profited significantly during her time with Metro Dream Homes. For
example, in May 2007, to document that she had a certain amount of assets in
order to qualify for a home mortgage, Nelson and another conspirator agreed that
Nelson would obtain a check from the company for $75,000 marked as an annual
bonus. Nelson wrote herself a $75,000 check, drawn on the POS bank account, and
deposited the check into her personal account. In fact, Nelson was not entitled
to any bonus. In May 2007, a related Metro Dream Homes company allocated
$150,000 to Nelson and her spouse to open “Ambassador Dream Homes,” which was
supposed to be an affiliate of Metro Dream Homes. Ambassador Dream Homes did not
commence operations prior to it being assumed by the receiver appointed by the
Maryland state courts.
In July 2007, Nelson and a conspirator decided they wanted to purchase new
Bentley automobiles costing $200,000 each. In order to qualify for financing,
Nelson falsely represented in a vehicle financing application that she had been
the chief financial officer of POS Dream Homes for 18 years and that her annual
income was $700,000.
In all, during her 20 months of employment with Metro Dream Homes (MDH),
Nelson received $413,075 in compensation.
On August 15, 2007, the Maryland Securities Commissioner issued a
cease-and-desist order to MDH and other related companies directing them to
immediately cease the offering and sale of unregistered securities in connection
with their promotion of the Dream Homes Program. However, Williams thereafter
called meetings in which investors were told that MDH was earning up to $10
million in one month and that the company’s legal difficulties were the result
of either misunderstandings or racial animus against company leaders. In October
2007, the Circuit Court for Prince George’s County, Maryland granted the
commissioner’s motion to freeze MDH assets and appointed a receiver.
As a result of the scheme, more than 1,000 investors in the Dream Homes
Program invested approximately $78 million. When Nelson’s co-conspirators
stopped making the mortgage payments, the homeowners were left to attempt to
make the mortgage payments that MDH had promised to make in full.
Nelson is the last defendant to be sentenced in this case. MDH’s owner and
founder Andrew Hamilton Williams, Jr., age 61, of Hollywood, Florida; chief
financial officer Michael Anthony Hickson, age 49, of Commack, New York;
president Isaac Jerome Smith, age 49, of Spotsylvania, Virginia; and vice
president of operations Alvita Karen Gunn, age 34, of Hanover, Maryland, were
all convicted by a federal jury of fraud conspiracy, wire fraud, and/or
conspiracy to commit money laundering in connection with their participation in
the mortgage fraud scheme. Hickson was also convicted of making a false
statement in a federal court proceeding. Judge Titus sentenced Williams to 150
years in prison, Hickson to 10 years in prison, Smith to 70 months in prison,
and Gunn to 60 months in prison.
This prosecution is being brought jointly by the Maryland and Washington,
D.C. Mortgage Fraud Task Forces, which are comprised of federal, state, and
local law enforcement agencies in Maryland, Washington, D.C. and Northern
Virginia. The task forces were formed to promote the early detection,
identification, prevention, and prosecution of various kinds of mortgage fraud
schemes. This case, as well as other cases brought by members of the task
forces, demonstrates the commitment of law enforcement agencies to protect
consumers from fraud and help to ensure the integrity of the mortgage market and
other credit markets. Information about mortgage fraud prosecutions is available
on the Internet at http://www.usdoj.gov/usao/md/Mortgage-Fraud/index.html.
United States Attorney Rod J. Rosenstein praised the FBI, the IRS-Criminal
Investigation, the Maryland Attorney General’s Office-Securities Division, and
the Federal Deposit Insurance Corporation-Office of Inspector General for their
investigative work. Mr. Rosenstein thanked Assistant U.S. Attorney Christen A.
Sproule, who prosecuted the case.
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