Failed to Make $3.9 Million in Payoffs to Mortgage Lenders Holding Liens on 13 Properties

BALTIMORE—U.S. District Judge Catherine C. Blake sentenced Anthony V. Weis, age 45, of Phoenix, Maryland, today to 78 months in prison followed by three years of supervised release for wire fraud in connection with a mortgage fraud scheme to defraud lenders of approximately $3.9 million in just eight months. Judge Blake ordered Weis to pay restitution of $4,007,705, which includes the loss to the title insurance company and the expenses of the individual victims.

The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation; Special Agent in Charge Barbara Golden of the United States Secret Service – Baltimore Field Office; and Special Agent in Charge Rebecca Sparkman of the Internal Revenue Service – Criminal Investigation, Washington D.C. Field Office.

“Mortgage lenders and borrowers depend on title companies to use loan proceeds to repay outstanding mortgages and other debts,” said U.S. Attorney Rod J. Rosenstein. “Maryland’s Mortgage Fraud Task Force will pursue criminals who defraud lenders and borrowers, and we will pursue restitution of any losses.”

According to Weis’s plea agreement, Weis was the president and a shareholder of Maple Leaf Title LLC (MLT), a real estate title agency located in Towson, Maryland. Weis directed MLT employees in 13 real estate closings conducted between February and September 2009 to withhold the payoff checks from institutions that held the existing mortgage loan notes on the properties. In each instance, the settlement statement sent to the borrower’s lender falsely represented that the payoff was being made.

In an effort to conceal the fraud scheme, Weis caused monthly mortgage payments to be made to the banks holding the mortgage notes. Believing that the bank had been paid off as a result of the settlement, the borrower stopped making monthly payments on that mortgage. And since that lender was receiving monthly payments, it had no reason to notify the borrower of any delinquency. However, because Weis was unable to send checks in every case where he had misappropriated the payoffs from escrow, a number of MLT clients received delinquency notices for non-payment of the mortgage note. A few were threatened with foreclosure and were forced to hire attorneys to prevent being ejected from their homes.

Because the existing mortgages had not been paid off, the liens against the property were not removed and a title free of pre-existing liens and claims (clear title) could not be passed to the new lender and borrower. An insurance company had issued title insurance policies to the borrowers guaranteeing clear title. As a result of Weis’s criminal conduct, the title insurance company ultimately paid out $3.9 million to financial institutions that held mortgage notes.

Weis was ordered to report on May 17, 2011, to the prison which will be designated by the U.S. Bureau of Prisons.

The Maryland Mortgage Fraud Task Force was established to unify the agencies that regulate and investigate mortgage fraud and promote the early detection, identification, prevention, and prosecution of mortgage fraud schemes. This case, as well as other cases brought by members of the task force, demonstrates the commitment of law enforcement agencies to protect consumers from fraud and promote the integrity of the credit markets. Information about mortgage fraud prosecutions is available at http://www.justice.gov/usao/md/Mortgage-Fraud/index.html.

This law enforcement action is part of President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

United States Attorney Rod J. Rosenstein commended the FBI, the U.S. Secret Service, and the IRS – Criminal Investigation for their investigative work and thanked First Assistant U.S. Attorney Stephen M. Schenning and Assistant U.S. Attorney Gregory Bockin, who prosecuted the case.

Barry Sparks, 53, of Allen Park, Michigan, pleaded guilty today to wire fraud and money laundering, announced United States Attorney Barbara L. McQuade.

McQuade was joined in the announcement by Erick Martinez, Special Agent in Charge, Internal Revenue Service, Criminal Investigation, and FBI Special Agent in Charge Andrew Arena.

According to court records, from 2006 through 2009, Stephen Sparks, 37, of Monroe, Michigan, and his uncle, Barry Sparks, took part in a scheme that solicited over $1 million from individual investors. Stephen Sparks represented to investors that his business, Global Points, had an opportunity to purchase a warehouse full of Chinese electronic equipment and sell it in the United States at a substantial profit, returning over five times the amount invested. Stephen Sparks also represented that Global Point was in a position for a second deal to acquire CD and DVD players that had been seized in Chicago, Illinois, and were being sold for the payment of back taxes. Stephen Sparks indicated that there would be a quick turn around and the profit would be twice the original investment.

Court records further showed that Stephen Sparks knowingly failed to inform the investors that he gave most of their money to his uncle, Barry Sparks, who had past criminal convictions for fraud. In furtherance of the scheme, Barry Sparks set up email accounts and transmitted messages to himself to make it appear as if he was negotiating overseas deals, when, in fact, Barry Sparks knew that there were no such deals or partners with whom he was negotiating. Stephen Sparks continued to provide excuses for the failure of the deals to close, and continued to solicit additional funds, claiming that the closings were imminent. In 2007, Stephen Sparks, aided by Barry Sparks, withdrew $12,000 in cash from his bank account knowing that these funds had been wired from Ohio to Michigan by an investor and, therefore, derived from the proceeds of wire fraud.

On January 25, 2011, Stephen Sparks pleaded guilty to wire fraud and money laundering charges and is expected to be sentenced on May 5, 2011 at 2:00 pm and Barry Sparks is scheduled to be sentenced on July 14, 2011 at 2:00 pm in front of United States District Court Judge Denise Page Hood.

The maximium sentence for wire fraud is 20 years’ imprisonment and a $250,000 fine and the maximum sentence for money laundering is 10 years’ imprisonment and a $250,000 fine.

“Investment fraudsters prey on trusting investors by enticing them with a can’t miss deal and then steal their hard earned money,” said Special Agent in Charge Erick Martinez. “IRS Criminal Investigation is committed to investigating investment schemes in an effort to protect the financial well being of the American investor.”

The case was investigated by special agents of the IRS Criminal Investigation and the FBI. It is being prosecuted by Assistant United States Attorney Ross I. MacKenzie.