Former Lawyer Receives 10 Year Sentence for Mortgage Fraud

Allison Tussey —  December 22, 2014 — Leave a comment

Michelle V. Mallard, 47, Charlotte, North Carolina, was sentenced by Chief U.S. District Judge Frank D. Whitney to serve ten years in prison followed by two years of supervised release on mortgage fraud and related charges. Mallard was one of 91 defendants charged in Operation Wax House.

Mallard’s conviction is the latest in Operation Wax House, an investigation which began in 2007. Of the 91 individuals charged, eighty-nine defendants have either pleaded guilty or  have been convicted following trial. The two remaining defendants are international fugitives.

Mallard, a/k/a Michelle Crawford, pleaded guilty mid-trial in July 2013 to mortgage fraud conspiracy, money laundering conspiracy and embezzlement in violation of the wire fraud statute.

According to court documents, Mallard served as a closing attorney for the mortgage fraud conspiracy, agreeing to use her law license to close fraudulent mortgage transactions for the conspiracy operating primarily in South Charlotte and Waxhaw, N.C. According to evidence introduced at Mallard’s trial, the conspirators purchased houses at inflated prices in exchange for large kickbacks and the defendant accepted bogus checks to make it appear as though buyers had provided money when they had not and agreed to pay kickbacks to other members of the conspiracy.

Evidence further showed that Mallard was stealing money from her trust account when she began participating in the mortgage fraud, and, as a result of that embezzlement, was unable to pay off a client’s prior mortgage, leaving the unknowing victim with a house that the victim no longer owned but upon which the victim was still required to make mortgage payments.

Prior to imposing the 10 year sentence, Chief Judge Whitney found that Mallard had committed perjury and attempted to obstruct justice, finding that Mallard’s testimony during a hearing in which she attempted to withdraw her guilty plea was “brimming with inconsistences and verbal gymnastics.” The Court also found that evidence introduced during the hearing on the withdrawal of plea was “indicative of a motive to thwart the judicial process.”

Mallard was remanded into custody following the sentencing hearing to immediately begin serving her sentence.

Mallard was one of six defendants charged in Wax House Case No. 3:11cr374, and the last of those defendants to be sentenced. In prior hearings, the Court imposed the following
sentences on those charged with Mallard:

Christopher Belin, 35, who served the mortgage fraud conspiracy as a real estate agent, was sentenced to 33 months in prison;

James E. Fink, 44, (also charged in Case No. 3:12cr239), who served the mortgage fraud conspiracy as a builder/seller and mortgage broker, was sentenced to 46 months  in prison;

Jimmy Hitchcock, 44, who served the conspiracy as a buyer and promoter, was sentenced to 46 months in prison;

Mitzi Jackson, 41, who served the conspiracy as a bank insider, was sentenced a split sentence of 18 months, with 9 months in prison; and

Coley Scagliarini, 44, who served the conspiracy as a mortgage broker, was sentenced to 46 months in prison.

The U.S. Attorney’s Office for the Western District of North Carolina. John A. Strong announced the sentence, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division and Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI), join the U.S. Attorney’s Office in making the announcement.

Operation Wax House in the Western District of North Carolina is being handled by the Charlotte Division of the FBI and the Criminal Division of the IRS for the Financial Fraud Enforcement Task Force, along with the Securities Division of the North Carolina Secretary of State with respect to a separate prosecution. The Mallard prosecution and sentencing for the government was handled by Assistant United States Attorney Maria K. Vento.

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Allison Tussey

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