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.