Federal authorities say they’ve broken a nearly $5 million real estate scheme in which several suspects allegedly filed false mortgage documents so they could buy about 25 properties in the Washington area, only to let many slip into foreclosure.
So far, at least one member of the scheme, Sabrina Weinberg of Bethesda, has pleaded guilty to mail fraud for buying seven properties between February and October 2006.
Weinberg bought the homes using $4.6 million in mortgage loans obtained by filing fraudulent loan applications, court documents filed in Maryland’s federal court said.
At least two other suspects, Terrence White and Timothy Reed, have been charged with mail fraud for their alleged roles. Four other suspects are alluded to in charging documents, but their names are not included.
According to prosecutors, Reed and White would entice straw buyers such as Weinberg by offering them $10,000 per property purchase to lie on loan applications.
For example, on several loan applications, Weinberg stated she earned more than $15,500 per month, when in fact she made much less, she admitted in her plea agreement.
Reed, White and a third suspect referred to only as “O.A.” in court documents persuaded 15 straw buyers to purchase about 25 properties in the District, Virginia and Maryland.
The scheme included bank employees who would send official letters to mortgage companies verifying the straw buyers had the assets they claimed on their applications, court documents said. The unnamed bank employees allegedly received kickbacks for their work.
Reed and White also allegedly used their Beltsville-based company, Brotherly Investment Group, to lie about renovations made at homes purchased by the straw buyers and boost the value of the homes when they were resold.
Weinberg admitted that the Brotherly Investment Group created $400,000 in false invoices for renovations in the homes she purchased.
Weinberg faces up to 20 years in prison and a $250,000 fine. No lawyers were listed for Reed and White, and calls to the Brotherly Investment Group were not returned Monday.
