Federal prosecutors said Thursday that owners of the Metropolitan Money Store targeted homeowners who risked losing their homes and then used straw buyers, fraudulently obtained loans and inflated real estate appraisals to strip equity from more than 100 homes in the Washington area.
The homeowners seeking help ended up losing whatever money they had invested and their homes.
Maryland investigators began to hear complaints from homeowners about Metropolitan in 2006. According to the indictment, Metropolitan lured in strapped owners through ads on television, radio and in print. The owners were told they didn't qualify for a refinancing of their mortgage, and in return were offered a "Foreclosure Reversal Program."
Under the program, they signed away their title to third parties, but were supposed to get help from Metropolitan to obtain a better mortgage that would allow them to repurchase the home.
Instead, Metropolitan allegedly used the straw buyers, who were paid $10,000 each, to take out big loans on the homes using inflated appraisals. They then stripped any equity out of the homes - allegedly $10 million - and allowed the homes to fall into foreclosure.
What would have stopped them? Simple, basic regulation and oversight. At the first sign of an inflated appraisal, at the first sign of a foreclosed property, at the first instance of a complaint from a borrower, something should have clicked. The investigators got wind of the problem in 2006, but weren't able to indict until now--a delay which cost millions. If they had been able to move against this scheme more quickly, it seems likely that the scheme itself would never have progressed as far as it did. Instead of a handful of properties, a hundred were done. Had there been a thousand, what would be the difference?
So what did all of the money fleeced out of these people buy?
The 25-count indictment unsealed Thursday names Lanham-based Metropolitan Money Store and its president, Joy Jackson, 40, who allegedly used some of the money to pay for a lavish wedding for herself and Kurt Fordham, one of the other seven indicted. The wedding reportedly cost $800,000 and included a designer gown with a 40 foot train and a concert by Grammy-award winning singer Patti LaBelle
WBAL-TV 11 News reports that Jackson was a former exotic dancer turned mortgage broker and is alleged to have been the ringleader of the scheme prosecutors say defrauded homeowners and lenders.
The charges include conspiracy, mail fraud and money laundering. Prosecutors also seek the return of $35 million in fraudulent loans that the group allegedly took out from lenders. Each count of the conspiracy carries a maximum penalty of 30 years in prison.
Ah, the gilded age. Only in America can an ex-stripper steal millions, pay for a lavish wedding, and probably get away with it. They called it the "Metropolitan Money Store" and they lavished the proceeds all over themselves like cheap, tawdry people without morals usually do. Who was paying attention? After all, they were doing this publicly, out in plain sight, out in plain view. One would think someone, anyone would have asked a couple of questions. Like...I don't know. Patti LaBelle? At your wedding?
I say probably get away with it, but the reality is that this case will probably languish in the courts, some of the money will be returned, most of it will never be repaid, a few hundred people will probably lose their homes, and at the end of the day, another scheme to defraud people will work its way through a system that is simply not flexible enough to stop the crooks.
Remember when Reagan said "In this present crisis, government is not the solution to our problem; government is the problem"? It led to the kind of thinking that says that we can't have regulators and rules and bureaucrats watching over what goes on. It led to the kind of thinking that has brought us understaffed and overworked investigators and regulators all over the country. It has brought us to a point in our society when there's no one doing what is necessary to keep thieves from stealing millions by preying on desperate people who were already victims of a practice where people who weren't even indicted yesterday sold them homes they couldn't afford.
Reagan unleashed a predator society, an underclass of people who took the idea of anything goes and deregulation and, like virtually any good Republican usually does, he left us a hefty bill our grandchildren are going to have to pay off.