Maryland prosecutors say it was all a complicated Ponzi scheme run by a company called Metro Dream Homes. Company officers were charged with tricking homeowners into pouring money into the business with the promise that the revenue would be used to pay off their mortgages.
Newly confirmed Assistant U.S. Attorney General Lanny Breuer said the charges should send a message to those engaging in mortgage fraud.
"Our resolve as a group is great," he said. "We will find you. We will prosecute you and we're going to put you in prison."
The indictment names company founder Andrew Hamilton Williams, Jr., 58, of Hollywood, Fla.; financial officer Michael Anthony Hickson, 46, of Commack, N.Y.; president Isaac Jerome Smith, 46, of Spotsylvania, Va.; and vice president Alvita Karen Gunn, 31, of Hanover, Md.
A fifth person, Carole Nelson, 50, of Washington, was named in a criminal information, a document normally filed as part of a plea deal.
"Some people hope to get rich quickly just by dreaming, without the hard work," said Rod Rosenstein, a federal prosecutor based in Maryland. "Usually people can achieve that only by breaking the rules."
Prosecutors say the company marketed the mortgage program at luxury hotels in Maryland, Washington and Beverly Hills, Calif. The company pitch was that, for a $50,000 investment, people could buy homes and not worry about the price because Metro Dream Homes would make their mortgage payments.
Investors were told they were investing in ATM machines, television advertising and calling card kiosks. But prosecutors say those businesses never made any real money.
Instead, prosecutors say, the investments were used to pay company salaries of up to $200,000. The company maintained a fleet of luxury cars and a staff of 10 chauffeurs, prosecutors said. And company officials allegedly traveled to the Super Bowl and the NBA All Star game with investor money.
Prosecutors say the investments were also used to repay clients who had pumped money into a prior failed ATM venture.
"The name Dream Homes was truly a nightmare for so many people in the state of Maryland," Douglas F. Gansler, the state's attorney general, said.