Flipping Frenzy.com is your source for news, information, and commentary on Real Estate and Mortgage Fraud. 
If you believe you have been a victim of real estate or mortgage fraud, start here! Select your state from the pulldown menu below:
Richmond investment firm boss charged with mail fraud
Donald C. Lacey, who ran a real estate firm involving investors from the Richmond area and millions of dollars, has been accused in federal court of making false promises and rarely using the money for real estate projects.
The U.S. attorney’s office charged Lacey, a former Henrico County police officer, with one felony count each of mail fraud and engaging in unlawful monetary transactions. The charges were filed late Wednesday.
The charge of mail fraud carries a maximum penalty of 30 years in prison. The maximum penalty for the second charge is 10 years. The maximum fine for each charge is $250,000.
“I think they ought to throw the book at him,” said Allan Mullian, a Richmond investor who, along with his family, had $2 million invested in as many as 100 properties in the Richmond area through companies Lacey was involved in.
Mullian received interest payments for 10 years from his investments, but the money stopped coming in late 2008. He’s not sure if he will recover his money.
Jeffrey Everhart, Lacey’s court-appointed attorney, said yesterday that more will be known in the next two or three weeks about how the case will evolve.
The U.S. attorney’s office declined to comment about the case.
Bond and plea hearings are set for March 15.
Lacey was the managing member of Capital Funding & Consulting, which was marketed as a private real estate investing firm that pooled investor funds to make short-term loans on investment properties, according to the filing in the U.S. District Court for the Eastern District of Virginia.
Lacey also ran several other businesses, including Clayton Investment Group, Premier Investment Properties and Tower Building Properties. He funneled money from Capital Funding through the entities under his control.
In effect, the money was supposed to be used to buy and fix up houses in the Richmond area and flip them at a profit.
“The loans exceeded the loan-to-value ratios promised to investors and the money. . . was rarely used for the designated real estate projects,” according to the court filing.
Lacey promised investors that the loans never would exceed 80 percent of value and that Capital Funding would ensure that the projects were viable, secure investments, according to the charges.
Instead, most of the money was used to pay pre-existing debt service on loans from Old Dominion Financial Services Inc., another company in which Lacey was involved, according to the filing.
Old Dominion, like Capital Funding, also solicited funds from investors and used the money to make loans to borrowers engaged in real estate activities.
Investors were promised high returns of 10 percent to 12 percent a year on promissory notes secured by deeds of trust.
Henrico-based Old Dominion was run by David A. Silver.
Old Dominion is listed as a creditor in a bankruptcy filing of Tamara B. Lacey, Lacey’s wife. Her bankruptcy petition claimed assets of $4.3 million and liabilities of $47.2 million. About $25.8 million of the debt is in promissory notes and guarantees of business obligations.
Mullian and at least a dozen investors sued, claiming they were duped in what some called an elaborate Ponzi scheme involving Richmond-area properties leveraged to the hilt.
According to the Tamara Lacey bankruptcy petition, the couple owned five houses – two in Mechanicsville, two near the Rappahannock River in Middlesex County and one near Wintergreen in Nelson County, ranging in value from $430,000 to $1.5 million.
They also owned a boat valued at $37,000, court records show.
The mail fraud charge says that Lacey sent a letter to an investor in Williamsburg in September 2008, saying that the money was “safe and secure,” the federal court filing said. The intent was to obtain money and property on false and fraudulent pretenses, it said.
The charge of engaging in unlawful monetary transactions involves a check written in May 2008 for $55,000 from one of Lacey’s companies that was used as a payment on his American Express account, according to authorities.
Lacey, if convicted, would forfeit any property traceable to the violations.
The forfeited property would include but not be limited to a value of not less than $7 million and no more than $20 million related to the mail fraud charge, the filing said. It also would include a sum of $55,000 for the unlawful monetary transaction charge.
A Ralph Roberts Site, Copyright 2005-2008 |