DETROIT - Two Michigan residents are among 16 people charged in what the U.S. Attorney's Office calls a nationwide fraudulent telemarketing scheme which focused on falsely inflated Detroit house values.
The scheme caused losses of more than $20 million to more than 290 victims in 46 states and Canada, says U.S. Attorney Barbara L. McQuade.
In Michigan, Richard Pierce and Matthew Golden both face charges including conspiracy to commit mail and wire fraud, wire fraud and conspiracy to commit international money laundering.
Authorities say the telemarketers were operating from call centers in Florida and New York. They were making unsolicited calls to people across the country offering to sell homes in Detroit.
Here's how the scheme played out, according to the U.S. Attorney's Office:
"The telemarketers lied about the values of the homes, and told investors that they were purchasing bank-owned homes that previously had mortgages worth many times more than the current sales price. In reality, the homes were oftentimes acquired for no more than $500 before quickly being sold by the telemarketers to victims for between $7,500 and $15,000.
After an investor agreed to purchase one home, the telemarketers caused the investor to believe that it was quickly resold to a hedge fund or foreign buyer for a substantial profit. In reality, the property was transferred to a shell company controlled by the telemarketers for no consideration and there were no profits.
Based on these sham transactions, which caused investors to believe that there was an established process and market for flipping homes in Detroit, numerous investors purchased multiple additional homes from the telemarketers. After purchasing a substantial number of homes, the investors had difficulty contacting the telemarketers and eventually all communication ceased. The telemarketers utilized aliases and frequently changed the name of their company to avoid disgruntled investors and law enforcement."
McQuade pointed out how this fraud did nothing but hinder the effort to fix Detroit's blighted neighborhoods.
"This nationwide telemarketing fraud not only caused millions of dollars in losses to victims of the scheme, but it also contributed to blight in Detroit neighborhoods," McQuade said in a statement. "Thousands of homes were left to fall into decay as a result of these individuals using Detroit real estate as a commodity to accomplish their fraud."
Here's all 16 people charged and their state of residence:
• Izhak Halbani (Florida resident)
• Antwan Reid (Florida resident)
• Scott Amster (Florida resident)
• Richard Pierce (Michigan resident)
• Matthew Golden (Michigan resident)
• Erez Arsoni (New York resident)
• Gregory Swarn (New York resident)
• Joseph Arsenault (New York resident)
• Richard Silverstein (Florida resident)
• Michelle Pintado (Florida resident)
• John Trumble (Florida resident)
• Wayne Scott Simpson (Florida resident)
• Theodore Jacobs (Florida resident)
• Joseph Haden (Florida resident)
• Scott Lipman (Florida resident)
• Steven Goldstein (Florida resident)
The U.S. Attorneys office said Gregory Swarn was arrested in November after he fled overseas utilizing a fraudulent passport. He was caught in Thailand and deported back to the U.S. to face charges for passport fraud and this telemarketing scheme. The FBI seized $1 million during the execution of search and seizure warrants.
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