Bernie Madoff has made the term “Ponzi Scheme” a household name, but in a new twist, a Maryland company called Metro Dream Homes has been shut down and accused of running an elaborate Ponzi scheme, defrauding investors of more than $70 million. The homeowners thought this money was going toward paying off their mortgages. This adds to the growing concerns surrounding mortgage fraud.

The company found new victims by holding seminars touting the dream of home ownership. This company offered homeowners the opportunity to pay a one time deposit of $50,000 to Metro Dream homes, which would use the money to grow their company, generating cash and paying off the investor’s mortgage over the next 5 to 7 years. The seminars were widely attended and many of the people attending wrote checks on the spot.

The company told customers that they would use some of the $50,000 investment to cover monthly mortgage payments, but that a portion of the funds would be used to purchase advertising, ATM machines, and other items related to growing the revenues of the business. Instead of investing the money in growing the company though, most of it was landing in the executive’s pockets. They attended Super Bowls, NBA All Star Games, and had a fleet of fancy cars funded by homeowners.

The scheme was dependent on a steady flow of new investors. The new money would be used to pay monthly mortgage payments for customers that had invested in the past, making sure they weren’t aware of the fact that their money was long gone, having been spent on other things. It was an elaborate plan that was bound to be discovered eventually, and in the end 5 people will probably spend time behind bars. The homeowners are unlikely to receive much in the way of restitution.

For most people, your home is your most valuable and important asset. Mortgage fraud is real, and there are more people looking to take advantage of desperate homeowners now than ever before. If something sounds too good to be true, it probably is. Always work on your mortgage with someone that you trust and with a reputable company to make sure you never become a victim of a scheme like this one.

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Tags: mortgage, Mortgage Fraud, Ponzi Scheme

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