Developer Gets 8 Years for Illegal Flipping Scheme Involving More Than 100 Properties

Allison Tussey —  February 12, 2014 — Leave a comment

David Lewis Johnson, Jr., Cary, North Carolina, was sentenced by Chief United States District Judge James C. Dever, III to a 96 month term of imprisonment, followed by 5 years of supervised release, on charges of Conspiracy to Commit Mail, Wire, and Bank Fraud, in violation of Title 18, United States Code, Section 1349.

Johnson was also ordered to pay $2,413,605.89 to 11 banks and lenders who were victims of the fraud.

With respect to the charge of Conspiracy to Commit Mail, Wire, and Bank Fraud, Johnson, operating through E-Z N Homes, engaged in a real estate flipping scheme. Johnson and others utilized various schemes to fraudulently obtain more than 100 properties with total mortgage loans in excess of $20,000,000. The defendant used straw buyers to purchase properties in exchange for a kickback from the loan proceeds. Johnson also fabricated investment statements to make it appear that straw buyers had, in some instances, one million dollars in assets. In fact, the straw buyers recruited by Johnson did not possess the income or assets to support the loans obtained in their names.

As a result of the scheme and Johnson’s conduct, banks and lenders issued loans to the conspirators in the amount of approximately $9.1 million, which resulted in $3.4 million in actual losses to the banks and lenders.

United States Attorney Thomas G. Walker announced the sentence.

Investigation of this case was conducted by the Internal Revenue Service Criminal Investigation and the Federal Bureau of Investigation. Assistant United States Attorney William M. Gilmore represented the United States.

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Allison Tussey

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