Guilty Pleas Abound As Outrage Mounts

It was going to be the fraud trial of the summer in Maryland, the tale of an ex-stripper who got rich off the desperation of homeowners she and her husband promised to save from foreclosure.

With their lavish wedding at the Mayflower, where they were serenaded by Patti LaBelle and feasted on lobster and Cristal, Joy Jackson and Kurt Fordham would have made sumptuous villains for just about any jury.

And that is almost certainly one reason they won't be having their day in court. Unwilling to test the depth of public displeasure, not to mention the government's evidence, Jackson, Fordham and many other defendants in Maryland's biggest mortgage fraud cases have been making deals of a different sort.

Last month, Fordham pleaded guilty in federal court, days after his wife had done the same. Each admitted playing a key role in the multimillion-dollar fraud carried out under the banner of the Metropolitan Money Store. Each avoided a trial before peers undoubtedly familiar with the troubles besetting homeowners.

"Jurors read the newspapers, and jurors are having trouble making their mortgage payments," Jackson's attorney, Timothy Sullivan, said recently. "So that comes into consideration when you think about having a jury trial where the defendants are accused of mortgage fraud."

Indeed, the economy is in upheaval. Foreclosures are widespread. Bernie Madoff is a household name. And hardly a month goes by without yet another case of fraud coming to light.

Not long after Jackson's plea, her attorney was back in court, this time with Michael K. Lewis, founder of the Michael K. Lewis Group and promoter of the Michael K. Lewis Financial Diet. Accused of defrauding desperate homeowners with false promises of relief, Lewis was pleading guilty, just as his three co-defendants did that same week, all avoiding a trial that was to have started yesterday in Greenbelt.

Just last week, the Justice Department announced federal charges against five people in what prosecutors say was a $70 million mortgage fraud Ponzi scheme that had at least a thousand victims, many in Prince George's County, which has been hit hard by foreclosures and fraud. A day after the Justice Department announced the charges, one of the defendants, Carole Nelson, was in court pleading guilty to money laundering.

Whether her four co-defendants in the so-called Dream Homes case will follow suit remains to be seen. But many defense lawyers say that unless the government's case is exceptionally strong or unusually weak, the outrage over mortgage fraud right now is hard to ignore.

"It's certainly something that enters into the mix of factors to consider," said Dale P. Kelberman, a Baltimore defense lawyer who was the longtime chief of white-collar prosecutions for the U.S. attorney's office in Maryland.

Not that public outrage is the only consideration. Most criminal prosecutions end in a guilty plea, and in federal court, tough sentencing guidelines often give defendants good reason to avoid going to trial.

Then, of course, there is the evidence, which every lawyer interviewed for this story said has to be the paramount consideration. "The most important thing is what are the facts and what is the strength of the government's case," said James W. Cooper, a white-collar defense lawyer at Arnold & Porter, who was a senior fraud and corruption prosecutor for the U.S. attorney's office in the District.

And in mortgage fraud cases, the evidence can be overwhelming. The transactions typically go through banks, which are very good about documenting customers' transactions.

"You have a huge paper trail," said Kurt Fordham's attorney, Thomas J. Saunders. "You have all these documents indicating what was done and how it was done, and the documents frequently speak for themselves in terms of fraud."

If, after all of that, the possibility of a trial is on the table, then the climate will almost certainly be a consideration in a case such as those involving Metropolitan Money Store or Michael K. Lewis, defense lawyers said.

"In this day and age, mortgage fraud is something that's going to be hugely unpopular in front of a jury," said Marc Gregory Hall, who negotiated a plea for Lewis's brother, Earnest. ". . . I think that a lot of people are going to think that preying on people with mortgage fraud is a particularly heinous thing to do in these times."