Defendant. ) 1. Defendant R. ALLEN SINCLAIR (*SINCLAIR') was the owner and operator of

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(1)

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF OHIO

EASTERN DIVISION

UNITED STATES OF AMERICA, )INDICTMENT

)

Plaintiミ、 )

)

)CASE NO

V

)

Title

18, United States Code,

R.

ALLEN

SINCLAIR,

)

Section 1344(2)

)

Defendant.

)

The Grand Jury charges:

GENERAL

ALLEGATIONS

At

all times relevant to this Indictment or other times specified:

1.

Defendant R.

ALLEN

SINCLAIR

(*SINCLAIR')

was the owner and operator

of

Newport Investments,

LLC

C'NI)

and Newport Development, Inc.

("ND")

located at 1 1

Overhill

Road, Youngstown, Ohio.

2.

SINCLAIR

advertised

NI

as a real estate investment company

primarily

in the business

of

buying, renovating. and selling residential real estate properties. He maintained web sites

with

the addresses: www.NewportWeBuyHouses.com and

www.NewportWeSellHouses.com.

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4.

First Place Bank, Huntington National Bank, Wachovia Bank, Wells Fargo Bank,

lst

County Bank, Ohio Savings Bank,

MidFirst

Bank, JP Morgan Chase,

Citi

Mortgage, Sun Trust Bank, and Bank

of

America, were financial institutions as defined

in l8

U.S.C. $ 20, in

that their deposits were insured by the Federal Deposit Insurance Corporation

C'FDIC).

5.

Five

ofthe

mortgage loans involved in the scheme set forth below were insured

by the Federal Housing Administration

C'FHA),

which was an agency

within

the United States Department

of

Housing and Urban Development

("HUD).

FHA

loan insurance protected lenders by guaranteeing that

ifthe

borrower defaulted on a loan, the lender could foreclose on the mortgage, sell the properfy and seek reimbursement from the

FHA

for any losses resulting from the default.

6.

One

ofthe

mortgage loans involved in the scheme set forth below was insured by

the Veterans

Affairs

("VA"),

which was an agency

within

the United States Department

ol

Veterans

Affairs.

VA

loan insurance protected lenders by guaranteeing that

ifthe

borrower

defaulted on a loan, the lender could foreclose on the mortgage, sell the property and seek

reimbursement from the

VA

for any losses resulting from the default.

7.

D.K.,

an

individual

known to the Crand Jury but not charged herein, was the managing partner at Commonwealth Land

Title

Agency

("CLTA,"

a,/Va Commonwealth Suburban), located in Youngstown,

Ohio.

In the scheme set forth below,

D.K.

served as the

primary

title

agent for real estate transfers that

SINCLAIR

referred to

CLTA.

8.

S.B.. an individual known to the Crand Jury but not charged herein, was the

administrative assistant to

SINCLAIR,

and also the treasurer for

NI.

S.B. handled all of the paperwork for

NI

and

ND,

served as the notary public on deed transfers, and communicated

directly

with

sellers regarding payments to various lenders.

う 乙

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9.

SINCLAIR,

by and through

NI

and

ND,

solicited money from

multiple

investors

within

the Northem

District

of Ohio. Eastem

Division.

SINCLAIR

enticed investors by off'ering an opportunity to eam interest rates in excess

of

107o, when as

SINCLAIR, NI

and

ND

then

well

knew, they would not be able to pay the promised retums.

10.

SINCLAIR

told investors their investments would be used for the acquisition and renovation of

multiple

residential real estate properties in and around Youngstown, Ohio, when

as

SINCLAIR

then

well

knew, many of the acquired properties needed

little

or no renovation. I

l.

SINCLAIR

converted a significant portion

of

the solicited investor funds

lbr

his

own personal benefit, and those

ofND.

12.

D.K.,

at the direction

of SINCLAIR,

prepared

multiple

HUD- I 's which reflected

a "cash" lender was involved in the transactions described in paragraphs

l5

through 28 below. The amount of the "cash" loans listed on the

HUD-l's

was the amount invested by each respective investor and was listed as the

"[p]rincipal

amount of new loan(s)" on the

HUD-l's.

SINCLAIR

failed to disclose to the financial institutions that additional mortgages were incurred

for each property.

13.

As a result

of SINCLAIR's

false and fraudulent pretenses, representations and promises, approximately

five

investors invested a total of approximately $147,000 in the aggregate.

Statutory

Violations

14.

From on or about December 12,2005, through on or about March 16, 2007,

SINCLAIR

bought houses from

individual

sellers through land trusts he created for each specific

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lenders' agreement to the supposed loan assumptions.

After

making

minimal

monthly payments,

SINCLAIR

stopped paying the mortgages without notifuing the sellers, who were unaware that they were

still

obligated on the loans. As a result, the mortgage loans went into default, which

caused substantial losses to many of the lenders and federal agencies that insured the loans.

15.

SINCLAIR

generally offered as his purchase price. the balance

ofthe

existing

balance on the mortgage loan or loans on the house. In most cases, the seller agreed to transfer

title

to lhe subjecl house to the respective land trusts based on

SINCLAIR's

false and misleading assurances that the existing mortgage was assumed by the land trust, thereby discharging the

seller

ofany

further legal responsibility for the mortgage payments.

16.

SINCLAIR

solicited potential sellers ofhouses subject to existing mortgage loans through various means, including materials on the

NI

website, brochures distributed or mailed to houses, media advertising, and contacts

with

Realtors.

He liequently targeted persons who were

likely

to seek quick sales

oftheir

house for various reasons, including but not limited to:

A.

the seller's house was listed for sale, but had not sold;

B.

the seller had a change in employment. such

asjob

loss, transfer, or

retirement; or

C.

the seller had a recent, pending, or impending separation or divorce.

17

.

SINCLAIR

crealed a separate land trust for each property that he acquired. By

the closing of the sale transaction, the property was deeded to the land trust

with ND

as the grantor and beneficiary and

NI

as the trustee.

18.

For each transaction,

SINCLAIR

drafted and signed a trust agreement, which listed

SINCLAIR

as the grantor and trustee for

NI

and

ND.

respeclively.

I

9.

SINCLAIR

and each seller executed

multiple

agreements created by

SINCLAIR

including a

limited

power of attomey; authorization to release information

tiom

existing lender;

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declaralion of trust; assignment

ofbeneficial

interesU appointment of trustee; and, assignment

of

escrow.

The agreements stated the amount and means by which the purchase price was payable,

which included a line beginning

"'Subject

to'

the existing loan balance," followed by the lender name, loan number, interest rate, other terms

ol

the mortgage loan, and the loan

balance.

A

similar line provided the same inlormation for a second mortgage when applicable.

20.

SINCLAIR

generally told the sellers he would either renovate and sell the

property, or find tenants on a rent-to-own program

until

the tenants could qualifu for a mortgage.

21.

Many sellers believed they were discharged

oftheir

mortgage loan obligations. and made commitments to other housing costs and financial obligations, often including new

mortgage loans on new homes.

22.

Instead of

NI

or the land trusts assuming the loans,

SINCLAIR

structured the transactions to transfer the

title

ofthe

houses to the land trusts,

with

the sellers

still

liable for the mortgage balances.

SINCLAIR

did not

notify,

or cause anyone to

notify,

the lenders of the purported loan assumptions because the lenders would have called the loans upon sale or

transfer.

He also made sure that anyone who handled the

title

work or closing documents did not

notify

the lenders.

23.

In all but one case, the

title

work and closings

for SINCLAIR

were handled by

D.K.

at

CLTA.

In the other case,

SINCLAIR

ananged for a lawyer acquaintance to handle the

title

work. At

each closing. the seller executed a warranty deed that transferred the subject houses to a land

trust.

CLTA

(or the attomey) provided to the seller a U.S. Department

of

Housing

&

Urban Development Settlement Statement

C'HUD-l')

that purported to disclose all

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24.

SINCLAIR

executed a

HUD-I

on behalf of

NI

for each

prope(y,

leading the sellers to believe that they sold their prope(ies to

SINCLAIR's

land

trust.

The

HUD-l's

listed each land trust as the borrower, and the sales price was listed as approximately the amount

ofthe

seller's assumed mortgage.

25.

After acquiring the properties as described above,

SINCLAIR

and S.B.

tlpically

conveyed the properties to others through land

contracts. After

some period of time,

typically

between

two

and six months,

SINCLAIR

continued to collect payments on the land contracts but stopped making mortgage payments on the properties.

26.

After SINCLAIR

stopped paying the mortgages, the sellers found themselves in the position of continuing to owe the mortgage loan balances to the lenders without

title

to the

property.

Lenders often contacted the sellers to obtain payment of the delinquent amounts. The sellers then attempted to contact

SINCLAIR

to complain and seek redress. In a number

of

circumstances,

SINCLAIR

and/or S.B. told the sellers that the lender had made a mistake and that

NI

would resolve the problem, then knowing the representation to be

false.

As the lenders' demands for payment continued, sellers often found themselves unable to reach anyone at

NL

SINCLAIR

and S.B. did not answer the phone and failed to retum most phone messages.

27.

From in or around December 2005, through in or around March 2007,

SINCLAIR

acquired approximately I 2 properties through the

NI

and

ND

land trusts.

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The Grand Jury further charges:

Counts

l-12

(Financial Institution Fraud)

28.

The allegations in paragraphs

I

through 27 of this Indictment are re-alleged and incorporated by reference herein.

29.

From in or around December 2005, through in or around March 2007, and on or about each

of

the dates set forth below, in the Northem

District

olOhio,

Eastem Division, and elsewhere,

SINCLAIR,

aided and abetted by S.B. and

D.K..

knowingly executed and attempted

to execute the scheme to obtain any

of

the moneys, funds, credits, assets, securities and other property owned by and under the custody and control

ofthe

financial institutions listed below by means

offalse

and fraudulent pretenses, representations, and promises,

with

each real estate transfer constituting a separate substantive count.

Collnt

ProDertr

Address Ci●

&Statc

Date

of

Transfer

Lender

Loss

Amount

l

371l Tylcr

Drlve

Canfleld,

OH

12/12/05 Wells Fargo Bank

$161,06800

ι 4523 Alderwood

Drive

Cantield,

OH

12/23/05 Chase

Ilome

Finance

S77,32700

, 796 0rio Lanc

Youngstown,

OH

02/02/06 Wells Fargo Bank

S71,57000

4 y b e h S

36︲5

Youngstown,

OH 04/18/06 Wells Fargo Bank S48,091 00

く ′ 7880 Hitchcock

Rd

YoungstOwn,

OH

05/26/06 Huntington National

$47.88300

6 591 5 Stillson Place Youngstown,

OH

05/30/06 MidFirst Bank

S106,44000

7 485 7th Strcct Struthers, OH 08/04/06

Citi

Mortgage

S26,77500

0 0 4866 Darbyshire Court Austintown, OH 08/04/06 Wachovia Bank

S61.50000

9 64 Walnut Street Slruthers,

OH 09/01/06 Wells Fargo Bank

$78,13073

10

6154 Glenwood

Ave

Youngstown,

(8)

4564 Woodridge Drive Austintown, OH 09/25/06 Bank

of

America $55,700.00 つ 4 119 S. Main Street Austintown,

OH 03/16/07 Sun Trust Mortgage $71 .500.00

All

in violation

olTitle

18, United States Code, Section 1344(2).

A TRUE BILL

Original document - Signatures on

file with

the Clerk of Courts, pursuant to the E-Govemment

(9)

United States v. R.

Allen

Sinclair

A TRUE BILL

FOREPERSON

STEVEN M DETTELBACH

Unitcd Staes Attomcy

By/%ι

多彩 ノ

Ann

C. Rowland

Figure

Updating...

References

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