Terry Hugh Mahon, 69, Broken Arrow, Oklahoma, has been sentenced to thirteen years in federal prison in connection with a fraudulent investment scheme involving rebate coupons and home mortgages.

As previously reported by Mortgage Fraud Blog, on March 26, 2008, a jury found Mahon guilty on charges of conspiracy, mail fraud, and money laundering. Mahon has been incarcerated since the jury’s verdict in March. A co-defendant, Grover Harold Phillips, Stillwater, Oklahoma, pled guilty to conspiracy and money laundering on March 21, shortly before trial. His sentencing is pending.

Starting in 2000, Mahon operated a Nevada corporation called Rebates International, Inc.; the offices of Rebates International were in Hollister, Missouri. Phillips worked in tandem with Mahon through a Nevada business trust called Amsterdam Fidelity Business Trust; Amsterdam’s offices were at Phillips’s home in Stillwater, Oklahoma. The evidence at trial showed that from 2000 to 2003, Phillips and Mahon worked with other people, including Emzie Huletty, Oklahoma City, Oklahoma, to sell “cashback rebate coupons” that would supposedly allow purchasers to pay off their home mortgages in five years. Mahon and the other conspirators made false representations that if victims paid 17% of the value of their homes to conspirators, they would receive rebate coupons worth the entire value of their homes. The money that they paid was to be invested in “high-yield” trading programs. At the end of five years, the victims could supposedly redeem these rebate coupons for face value and pay off their mortgages. Many victims re-financed their homes to generate the 17% required to participate in the program.

The jury heard more than two days of testimony, including evidence offered by victims who took out mortgages so that they could pay tens of thousands of dollars into the program. The evidence demonstrated that the only investment in anything resembling a “high-yield” trading program was a $50,000 payment in April of 2002 to OsGold, a massive Ponzi scheme that folded in the wake of a federal investigation. The jury also heard evidence that Mahon and other conspirators siphoned off hundreds of thousands of dollars that were supposedly to be invested for the benefit of coupon holders. After deliberating just over an hour, the jury convicted Mahon on all four counts in which he was charged. These included conspiracy to commit mail fraud, using a commercial interstate carrier to commit fraud, engaging in a financial transaction over $10,000 in criminally derived proceeds, and engaging in a financial transaction designed to conceal the nature of the funds involved.

Mahon was sentenced to thirteen years in prison for his crimes. He was also ordered to pay $3,079,684.95 in restitution to hundreds of victims and is subject to a forfeiture order in the amount of $1,061,294.85.

Emzie Huletty, who operated EASE Corporation, Vision Services, Inc., and Sunset Financial Group, all located in Oklahoma City, pled guilty to mortgage fraud on March 24, 2006, and was sentenced to two years in prison.

“These defendants, aided by others, concocted a scheme whereby they falsely promised buyers and homeowners that if they took out a new mortgage or refinanced their existing mortgage they could pay it off in just five years with one catch – they had to buy a bogus ‘cashback rebate coupon,’” stated United States Attorney John C. Richter. “This coupon promised financial freedom but delivered financial misery. I want to commend the FBI and IRS Criminal Investigative Division for their fine work in making sure these con-artists were held accountable.”

This case is the result of an investigation conducted by the Federal Bureau of Investigation and the Criminal Investigative Division of the Internal Revenue Service with the assistance of the Oklahoma Department of Securities. It was prosecuted by United States Attorney John C. Richter and Assistant U.S. Attorney Scott E. Williams.