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November 6, 2010

Myrtle Beach Developers Plead Guilty to Fraud Charges

COLUMBIA, SC—United States Attorney Bill Nettles stated today that Jeffrey Todd Shoup, age 45, and David Thomas Hix, Jr., age 49, of both of Myrtle Beach, South Carolina, pled guilty in federal court in Florence, to conspiracy to commit mail, wire, and bank fraud, a violation of Title 18, United States Code, Section 1349. United States District Judge Terry L. Wooten of Florence accepted the pleas and will impose sentence after he has reviewed presentence reports prepared by the U.S. Probation Office.
Evidence presented at the change of plea hearing established that in 2006, Jeffrey Todd Shoup and David Thomas Hix were involved in real estate development businesses in the Myrtle Beach area including but not limited to T&J Development Company, T&J Development Company, LLC, and Ocean Companies, Incorporated, dba Ocean Front Real Estate Company. Shoup and Hix were involved in the development, marketing, and sale of condominiums called Bahama Island and Crystal Palace and the sale of boat slips for Ship-A-Hoy Marina. They solicited pre-construction sales from numerous investors for condominium units at Bahama Island and Crystal Palace and boat slips at Ship-A-Hoy Marina. Shoup and Hix required that the investors put down deposits, falsely promising investors that these funds would be held in escrow. When construction funding could not be obtained for these projects, instead of refunding investor deposits, Shoup and Hix caused these funds to be wire transferred in October 2006 out of a NBSC Bahama Island account in the amount of $5,886,000 and out of a Bank of America Crystal Palace account in the amount of $988,279.60, for a total of $6,874,279.60 to purported financier DuWayne Woods’ Wells Fargo account in San Diego, California. From October to December of 2006, Woods returned via wire transfer $1,877,500 to the T&J Development Beach First account. Hix and Shoup ultimately used these funds via wire and check transfers for working capital, personal expenses, and operating expenses.
Additionally, Shoup, in an effort to obtain a $750,000 loan from the Glenn Michaels’ Group of Arizona, submitted a 2005 financial statement purportedly prepared by Larry Phillips, CPA. Shoup also submitted a 2006 financial statement purportedly prepared by Larry Phillips, CPA, to the Glen Michaels’ Group when obtaining a $1,200,000 loan to be used for developing Lambert Beach in Tortolla, British Virgin Islands. Larry Phillips, CPA, was interviewed and confirmed that he did not prepare the 2005 or 2006 financial statements.
“Shoup and Hix knew where the proverbial soft spots were and purposefully took advantage of the vulnerabilities in the system. Over 50 investors lost about $7 million dollars and three banks lost $ 2.2 million. That’s wrong, and prosecuting this sort of fraud will continue to be a priority for the U.S. Attorney’s Office,” said U.S. Attorney Bill Nettles. Mr. Nettles stated the maximum penalty Shoup and Hix can receive are fines of $250,000.00 and/or imprisonment for 20 years, plus a special assessment of $100.00.
The case was investigated by agents of the Federal Bureau of Investigation. Assistant United States Attorney William E. Day, II of the Florence office handled the case.

Posted By: Ralph Roberts @ 7:42 am | | Comments (0) | Trackback |
Filed under: Bank Fraud,Mail fraud,Ocean Front Real Estate Company,South Carolina,Wire Fraud

November 17, 2007

Matthew Cox Sentenced to 26 Years in Jail and Fined $12 Million for Real Estate & Mortgage Fraud

Many people believed this day would never come, but exactly one year to the day from when he was apprehended by Federal authorities, this nation’s most notorious Real Estate and Mortgage Fraud-related criminal has finally been sentenced for his role in a brazen string of acts that stunned nearly everyone who had ever played a hand in Real Estate and Mortgage Fraud forensics.

Thirty-eight-year-old Matthew Bevan Cox, the poster child for Real Estate and Mortgage Fraud in this country… the same man who kept federal authorities at bay for over three years and was the subject of an intense nationwide manhunt (and whose face landed on the U.S. Secret Service’s list of the Most Wanted Fugitives for his role in numerous Real Estate and Mortgage Fraud scams)… cried like a little baby in U.S. District Court in Atlanta yesterday afternoon, and was promptly sentenced to serve 26 years in Federal prison AND pay his victims up to $12 million in restitution.

For those of you who have never heard Matthew Cox talk about his crimes, the following clip, from NBC affiliate WSMV-TV in Nashville, Tennessee, will give you a small taste of what was going his mind:

Matthew Cox was indicted by a Federal grand jury in Atlanta in late-September of 2005 on 42 counts of mortgage fraud, identity theft, money laundering, and conspiracy. The Middle Districts of Tennessee and Florida filed criminal charges against Cox in April of this year, charging him conspiracy to commit mortgage fraud, aggravated identity theft, and passport fraud.

Cox, who was pleaded guilty to all charges on April 10th of this year, was apprehended on November 16, 2006 in Tennessee after a Nashville man read about him in a local newspaper and tipped off U.S. Secret Service agents. In the world of Real Estate and Mortgage Fraud forensics, no one person’s name sends a shiver up the back of a spine more so than Matthew Cox, who was also known as Maxwell Price, David Richard Freeman, Gerald Scott Cugno, Michael Shawn Shanahan, Gary Lee Sullivan, Michael John Eckert, Michael White, Kevin White, David White, James Redd.

Matthew Cox used stolen identities to obtain drivers licenses, purchase vehicles, lease mail drops, rent apartments, and open bank accounts to receive Real Estate-related scheme proceeds throughout the states of Georgia, Florida, Alabama, South Carolina and North Carolina. Cox’s accomplice in many of his scams– Rebecca Marie Hauck–was sentenced on November 15, 2006 (the day before Cox was captured) by a U.S. District Judge in Georgia to serve 5 years and 10 months in prison for her role in the now infamous string of mortgage and bank fraud-related crimes.

How Cox be able to afford the $12 million he was ordered to pay in victim restitution is anyone’s guess, but despite his wicked ways, Matthew Cox was–and may still be–a talented writer and artist who just so happened to leave behind a number of works. According to WXIA-TV in Atlanta, a representative of the victims is planning to offer, perhaps as soon as this coming week, four of Cox’s paintings for sale on eBay, with 100 percent of the proceeds going into the victims’ restitution fund. Cox did signed away the rights to his future works, including any additional paintings and unpublished novels, past and future, to his victims’ restitution fund, so that too may provide some relief.

For now, we can all sleep a little better at night knowing that Matthew Cox is finally paying for his crimes. That said, 26 years in prison and $12 million in fines may not be enough for this guy or the others who try to follow his example.

November 16, 2006

Rebecca Huck Sentenced to Nearly 6 Years in Prison

Rebecca Marie Hauck–who has been called the ‘better half’ of a Bonnie & Clyde team that is credited with committing more real estate and mortgage fraud-related crimes than you can shake a stick at–was sentenced yesterday afternoon by a U.S. District Judge in Georgia to serve 5 years and 10 months in prison for her role in a string of mortgage and bank fraud-related crimes.

As most Flipping Frenzy readers already know, Hauck was involved in fraud schemes that resulted not only in millions of dollars in losses for innocent homeowners and banks, but she also snarled property titles on residences throughout the southeastern part of the United States. Hauck and co-defendant Matthew Cox (who is still on the loose, by the way) stole homeowners’ identities and placed multiple loans on houses they did not own, which created a level of havoc that is still being felt across five southeastern states.

Hauck, who is just 34-years-old, will serve her time in a federal prison, followed by five years of supervised release. She was also ordered to pay restitution of $1,197,970.00, and was ordered to forfeit any profits from book, television or any entertainment rights she secures here in the U.S.

According to the information presented in court, Hauck and co-defendant Cox fraudulently erased mortgage liens on rented properties. In the process, they stole the identities of the people from whom they rented, and frequently obtained multiple new mortgage loans on the properties. After they executed the scheme in one location, they changed locations and did the same thing over and over again. Hauck and Cox used stolen identities to obtain drivers licenses, purchase vehicles, lease mail drops, rent apartments and open bank accounts to receive scheme proceeds throughout the states of Georgia, Florida, Alabama, South Carolina and North Carolina.

Hauck was indicted in late-September of 2005 on 42 counts of bank fraud, wire fraud, interstate transportation of fraud proceeds, identity theft, money laundering and conspiracy. Her indictment, which was unsealed in March of this year when the U.S. Secret Service arrested her in Houston, Texas, came as a wake-up call to some real estate industry insiders.

For his part, 36-year-old Matthew Cox–whose known aliases include Maxwell Price, David Richard Freeman, Gerald Scott Cugno, Michael Shawn Shanahan, Gary Lee Sullivan, Michael John Eckert, Michael White, Kevin White, David White, and James Redd–is alleged to have obtained a number of the stolen identities from homeless people by posing as a Red Cross worker taking a survey. According to the U.S. Secret Service, he has used elaborate schemes to avoid capture, including obtaining state-issued and counterfeit driver’s licenses. He has not used his true name since 2003, and is believed to be armed and dangerous. Law enforcement is seeking the assistance of the real estate industry in locating Cox, who has been a fugitive since December of 2003. Anyone with information about Matthew Cox’s whereabouts can contact the Secret Service toll-free, 24 hours a day, by calling 1-877-242-3375.

September 20, 2006

Mid-West Tops the List of Real Estate and Mortgage Fraud ‘Hot Spots’

With fewer houses selling, increases in foreclosures and real estate prices dropping, the housing market is experiencing the “soft landing” that has been long predicted, and the mid-western United States is once again the most vulnerable part of the country when it to real estate fruad. Earlier this week, CoreLogic released the latest edition of the Core Mortgage Risk Monitor, a report that forecasts the geographic regions most likely to experience the economic consequences of increased levels of fraudulent activity over the next 12 to 18 months.

According to the latest report, the risk index rose by 5 percent between the first and second quarters of 2006, after increasing by 6.4 percent between the fourth quarter of 2005 and first quarter this year. This increase indicates that the risk of real estate and mortgage fraud causing economic impact in vulnerable markets continues to rise at an unprecedented rate.

The top five major metropolitan statistical areas most at risk are:

1. Detroit-Livonia-Dearborn, Michigan
2. Memphis, Tennessee
3. Dayton, Ohio
4. Akron, Ohio
5. Gary, Indiana

The top five markets showing the most noticeable increase quarter over quarter are:

1. Gary, Indiana
2. Detroit-Livonia-Dearborn, Michigan
3. Goldsboro, North Carolina
4. Flint, Michigan
5. Florence, South Carolina

The Core Mortgage Risk Monitor measures what we call ‘collateral risk,’ which is the risk associated with the accuracy of a residential property valuation and the sustainability of that valuation over the life of the mortgage due to the unique characteristics of the property, market, and mortgage contract participants.

August 3, 2006

Update: Two South Carolina Realtors Lose Licenses

Two South Carolina real estate agents who were accused of mortgage fraud have agreed to permanently relinquish their sales licenses. According to The Sun Times, Jack Barnhill and Karl Moser, both of whom worked for Barnhill Realty Co., gave up their real estate licenses earlier this week just moments before the S.C. Real Estate Commission was to hold a hearing involving the two men and their role in a deal in which they falsified loan documents.

For complete coverage of the facts leading up to this week’s development, check out FlippingFrenzy.com’s previous posts on the case. For further details on this week’s development, click here for an excellent recap from The Sun Times.

Posted By: Ralph Roberts @ 7:52 pm | | Comments (0) | Trackback |
Filed under: Mortgage Fraud,South Carolina

May 10, 2006

Update: Fraud in South Carolina’s Manufactured Housing Market

As a follow-up to a blog entry I made back on the 27th of February, the South Carolina Manufactured Housing Board yesterday revoked the licenses of three manufactured home dealers who provided fraudulent information on buyers’ loan applications.

According to The Sun News, the Board permanently revoked the licenses of Henry Curtiss and Charles Michael Roy, who worked as salesmen for Beach Homes Corp. Both Curtiss and Roy signed agreements to surrender their licenses and waive a formal hearing, while Beach Homes Corp. owner Randy Conner waived a formal hearing and will have 60 days to surrender his license.

Click here for the entire Sun News article.

Yesterday’s announcement comes of the heels of one prominent South Carolina attorney going record with The Sun Times as stating that fraud is so rampant among the state’s manufactured home dealers that any real estate professional who refuses to participate in generating fraudulent deals puts themselves at a competitive disadvantage. As I’ve pointed out before, South Carolina’s Consumer Affairs Department has just five investigators overseeing nearly 750 mortgage brokers statewide, as well as thousands of other businesses across the state, so it’s nice to finally hear that the Manufactured Housing Board is stepping up to the plate to help put a stop to South Carolina’s widespread real estate fraud problem.

Posted By: Ralph Roberts @ 9:00 pm | | Comments (0) | Trackback |
Filed under: Manufacturered Housing,South Carolina

February 27, 2006

Real Estate Fraud is Booming in South Carolina’s Manufactured Housing Market

A lawyer in South Carolina lawyer says real estate fraud is so rampant among manufactured-home dealers in his state, that any real estate professional who refuses to participate in generating fraudulent deals puts themselves at a competitive disadvantage. According to a news article in yesterday’s The Sun News, South Carolina has the highest concentration of manufactured homes in the nation (about 20 percent), and real estate fraud–namely the kind that involves mortgage brokers, not consumers, falsifying income and bank account information in order to secure loans for their customers–is out of control.

From yesterday’s Sun News:

Mortgage Fraud Tension Ratchets Up

Mortgage fraud in Horry County’s manufactured home industry, once a whispered topic of conversation among some in the real estate community, has caught the attention of state agencies and real estate groups, which vow to crack down on the problem. Cleaning up the industry, however, has proved to be a difficult process for short-staffed state agencies charged with protecting the public.

Home buyers who say they’ve been taken advantage of are frustrated with the limited help that’s available and what they perceive as a lack of progress on their cases.

“I’ve talked with a lot of attorneys, and no one will touch my case,” said Robert Romaniello, a Conway man who says he was asked to take part in a fraudulent mortgage. “They say it would cost me more in attorney’s fees than what I could get. It’s not worth it to them. And I’m not sure the state agencies are even taking it seriously. I keep getting passed around from agency to agency.”

Investigators with the S.C. Department of Labor, Licensing and Regulation talked with Ed and Hanna Hudzik about their mortgage problems in December. The investigators also took the couple’s loan documents to Columbia. “We haven’t heard a thing from them since then,” Hanna Hudzik said. “They haven’t even returned the papers we let them borrow.”

David Bennett, administrator for the state’s Manufactured Housing Board, said his agency wants to crack down on fraud, but investigations are rarely quick or easy. The housing board, a division of the state’s LLR department, has two investigators who specialize in fraud cases, Bennett said. They oversee about 300 manufactured home sellers statewide.

Click here for the rest of the article, which goes on to mention that South Carolina’s Consumer Affairs Department has just five investigators to oversee nearly 750 mortgage brokers statewide, as well as thousands of other businesses across the state, including pawn shops, health clubs, continuing care retirement communities, and staff leasing companies.

The size and scope of the real estate and mortgage fraud problem is incomprehensible when you hear about figures like these… five (5) investigators for seven hundred and fifty (750) brokers, or one hundred and fifty (150) brokers per investigator, and as the article points out, SC’s Consumer Affairs investigators cover more than just mortgage brokers.

Can you imagine being a consumer affairs investigator in South Carolina… on Monday you investigate complaints about the policies associated with canceling health club memberships, and then on Tuesday you’re knee-deep into the complexities related to potentially fraudulent mortgages. Unbelievable. When will states like South Carolina wake up and smell the coffee?

At the very least, South Carolina’s Consumer Affairs Department web site should warn consumers about fraudulent mortgage brokers… as opposed to using valuable space on the front page of its site to warn mortgage brokers about originator application deadlines (and no, I’m not making this up… click here to see for yourself!).

Posted By: Ralph Roberts @ 10:15 am | | Comments (1) | Trackback |
Filed under: Manufacturered Housing,Real Estate Fraud,South Carolina