A telemarketing scheme that took in more than $20 million from hundreds of victims nationwide by flipping 2,000 homes purchased for as little as $500 each also contributed to neighborhood blight in Detroit, federal prosecutors said in announcing the indictment of 16 people accused of fraud.

The scheme, run out of call centers in Florida and New York, employed familiar-sounding company names — including Prudential REO Group, Allstate REO Group and Blackstone Real Estate Group — to dupe victims.

The alleged perpetrators of the scheme “did more than steal money — their greed and fraud compounded the proliferation of vacant homes left for ruin in far too many Detroit neighborhoods,” said Paul Abbate, special agent in charge of the FBI’s Detroit field office, in a statement.

According to a grand jury indictment, the scheme worked like this:

  • First, sales agents or “brokers” made an initial call to prospective investors using a scripted sales pitch, inviting them to buy cheap properties.
  • “Closers” who represented themselves as a senior figure in the fraudulent companies were brought in to seal the deal.
  • After a victim had purchased a property, a “loader” was brought in to convince them to up their stake by purchasing a package deal of multiple single-family homes.
  • The process was facilitated by managers who handled day-to-day complaints or questions from the investors, and also made sure the sales agent, closer and loader made commission from the sale.

From December 2009 through March 2014, more than 290 investors from 46 states and Canada mailed or made wire transfers to companies headquartered in Detroit that operated as escrow agents — First Metro Real Estate Services, Northwest Real Estate Services and Access Services — prosecutors said.

Companies described as regional mortgage lenders — Chase REO Group, Hartwell Mortgage Group and U.S. Mortgage Specialists — were actually holding companies controlled by the same people behind the telemarketing scheme, prosecutors said.

Victims were told that the homes they’d bought were being flipped to foreign investors or hedge funds. But those companies — including First Trans Global and Global Contracting Group — were allegedly just shell companies with few assets.

Show Comments Hide Comments

Comments

Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Inman Connect is LIVE today! Join us and thousands of your peers from wherever you are.Register Now×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription