Scam Artist Sentenced To 24 Years
Thursday, December 21, 2006
A man convicted of swindling banks and investors in an elaborate mortgage scam in the District has been sentenced to 24 years and five months in prison and ordered to pay more than $6 million in restitution and forfeitures.
Charles E. Hall Sr. of Accokeek was sentenced Dec. 8 in U.S. District Court in Washington by visiting U.S. District Judge Sterling Johnson Jr., who said "the community must be protected from Mr. Hall, who is a predator."
Hall, 37, was convicted in August of eight felonies, including bank fraud and money laundering.
Authorities said the sentence was among the toughest in recent memory for a white-collar crime. Former Enron executive Jeffrey K. Skilling, who was at the center of a national debacle, received a sentence of 24 years and 6 months, one month longer than Hall's.
According to the U.S. Attorney's Office, Hall targeted more than 30 District homes in 2002 and 2003 in a "flip sales" scheme, in which homes are resold quickly at inflated prices.
In the end, authorities said, Hall bilked banks out of $5 million and investors out of tens of thousands of dollars. Six other people -- a real estate agent, two loan underwriters, a real estate settlement agent, a bogus appraiser and a property speculator -- have pleaded guilty in the scandal.
Hall's attorney, James W. Beane Jr., said his client was trained by his employer to conduct business in a certain manner, which included paying adjusters and other people to expedite matters. He said his client had no idea what he was doing was illegal.
The scam began in about 2002, a few years after Hall was released from prison for mail fraud, according to court documents.
After lying about his criminal record, Hall landed a job as a loan officer at Guaranty Residential Lending, a mortgage company and subsidiary of a Texas bank, court documents and authorities said.
Hall recruited friends as "straw buyers" to purchase homes in the District neighborhoods of LeDroit Park and Eckington. He then submitted loan applications for the homes, which had been appraised at falsely inflated prices.
Hall then paid two mortgage underwriters to approve bogus home loans totaling $14 million, which Hall controlled, the U.S. Attorney's Office said.
A real estate property speculator bought the homes at true value and often resold them at inflated prices the same day to a straw buyer. The sales generated profits of up to $450,000 on each home.
Authorities said that the straw buyers who were friends of Hall were unaware of the scam, which left a series of abandoned homes in D.C. neighborhoods. Some friends didn't put up any money, but others invested about $5,000, which they lost, the U.S. Attorney's Office said.
The banks eventually resold the homes, but collectively lost about $5 million.
"This type of real estate flipping can damage neighborhoods by taking middle-class houses out of circulation and leaving them run-down, vacant and neglected," said Assistant U.S. Attorney Virginia Cheatham of the fraud and public corruption unit. "By targeting houses in just a few D.C. neighborhoods, Charles Hall concentrated his impact and left behind abandoned properties which hurt the health and security of the entire neighborhood."
Authorities said Hall used some of the proceeds to buy expensive Italian suits, $200 shirts and luxury cars, including a $150,000 Mercedes-Benz CL65.