PROPERTY MANAGEMENT COMPANY OWNERS PLEAD GUILTY

The defendants each pleaded guilty in the U.S. District Court for the District of Columbia to charges of conspiracy to commit bank fraud, conspiracy to commit mail fraud, and conspiracy to defraud the government. Talbott appeared in court on January 9, 2012, and Ransom appeared on January 6, 2012. The Honorable Robert L. Wilkins presided over both of the hearings.

As part of their plea agreements, the defendants agreed to criminal forfeiture and restitution of more than $2.8 million. Under the voluntary federal sentencing guidelines, Talbott and Ransom each face between 46 to 57 months of incarceration. Talbott's sentencing is scheduled for May 29, 2012, and Ransom's sentencing is scheduled for April 23, 2012.

According to the government's evidence, Talbott was the president and Ransom was the vice president of a property management company located in Washington, D.C., that operated under multiple names, including Esquire LLC, Federal City Mowbray, and Private Properties Inc. (collectively referred to as "Esquire"). The defendants also lived together at a residence on North Portal Drive NW, Washington, D.C.

From 2004 to the present, the defendants engaged in three separate fraudulent schemes, resulting in more than $2.8 million in losses to the victims.

Mortgage Fraud

On June 30, 2004, Ransom purchased the property on North Portal Drive NW, Washington, D.C., for $975,000, financing the purchase, in part, with two loans in the total amount of $731,250 from WMC Mortgage Corp., a mortgage lender. Ransom executed two deeds of trust on the property, granting WMC a security interest in the property.

On December 29, 2005, Ransom filed with the District of Columbia Recorder of Deeds two forged Certificates of Satisfaction, purporting to release the WMC liens on the Portal property.

Then, on January 13, 2006, Ransom sold the Portal property to Talbott for $1,110,000. The defendants provided copies of the forged lien releases to the settlement company. Talbott obtained a loan in the amount of $750,000 from Fremont Investment and Loan. Talbott executed a deed of trust on the property, granting Fremont a security interest in the property. Ransom received a check in the amount of $515,034 from the settlement.

Less than a month later, on February 2, 2006, Ransom again "sold" the Portal property to Talbott, this time for $1,250,000, despite the fact that Talbott was already the legal owner. The defendants provided copies of the forged lien releases to the settlement company. Talbott obtained a loan of $890,000 from First National Bank of Arizona. Talbott executed a deed of trust on the property, granting First National Bank of Arizona a security interest in the property. Ransom received a check in the amount of $801,280 from the settlement.

Fraud Relating to Property Management

Through their property management company, Esquire, the defendants entered into contracts with numerous property owners in the Washington, D.C. area to manage their rental properties. Under many of the contracts, the defendant were required to collect rental payments from tenants and use those funds to pay bills relating to the properties, such as utility bills. After paying any bills and deducting an administrative fee, the defendants were required to remit the remainder of the rental payments to the property owners.

As part of their fraudulent scheme, the defendants frequently collected rental payments from tenants but did not pay the bills for the properties, despite falsely representing to the property owners that the bills had been paid. Instead, the defendants used these funds for their own benefit. In addition, the defendants also sent forged bank statements to some of their clients, misstating the balances in their clients' accounts.

Through this fraudulent scheme, the defendants defrauded at least 54 clients out of a total of $1,269,278.

Tax Fraud

For tax year 2006, the defendants filed false federal and District of Columbia tax returns. For both of their federal and D.C. taxes, the defendants submitted Forms W-2 that indicated federal and D.C. income tax withholdings in the following amounts:

Talbott (federal) $214,677 (state) $75,432
Ransom (federal) $86,544 (state) $31,222

In fact, the defendants did not have any actual federal or D.C. income tax withholdings for tax year 2006. Talbott's false tax returns generated a federal tax refund in the amount of $66,655 and a D.C. tax refund in the amount of $30,897. Ransom's 2006 federal and D.C. tax refunds were blocked prior to disbursement.

The guilty pleas were announced by Ronald C. Machen Jr., U.S. Attorney for the District of Columbia; Daniel S. Cortez, Inspector in Charge, Washington Division, U.S. Postal Inspection Service; James W. McJunkin, Assistant Director in Charge of the FBI's Washington Field Office; and Eric Hylton, Acting Special Agent in Charge of the Washington Field Office of the Internal Revenue Service-Criminal Investigation.

In announcing the guilty pleas, U.S. Attorney Machen, Inspector in Charge Cortez, Assistant Director McJunkin, and Acting Special Agent in Charge Hylton commended the outstanding investigative work of Postal Inspector Steven Sultan of the U.S. Postal Inspection Service; agents of the FBI's Washington Field Office; agents of the Internal Revenue Service-Criminal Investigation, and Kevin Craddock of the District of Columbia Office of the Chief Financial Officer, Criminal Investigation Division. They also praised the efforts of members of the U.S. Attorney's Office, including forensic accountants in the Fraud and Public Corruption Section; Paralegals Diane Hayes and Sarah Reis; former Paralegal Carolyn Cody; Legal Assistants Jamasee Lucas and Krishawn Graham; Information Technology Specialist Joshua Ellen; former Intern Sierra Tate, and Assistant U.S. Attorney Anthony Saler, who is working on forfeiture issues, and Assistant U.S. Attorney David Johnson, who is prosecuting the case.

Courtesy Mortgage Fraud Blog