WASHINGTON—Carline M. Charles, 41, who ran a business that supposedly would rescue distressed homeowners from foreclosure, has been sentenced to three-and-a-half years in prison for her role in a mortgage fraud scheme that cost homeowners over $774,000 and lenders more than $1 million, U.S. Attorney Ronald C. Machen, Jr. and James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office, announced today.

Charles, of Silver Spring, Maryland, pled guilty in July 2012 to a charge of conspiracy to commit bank fraud. She was sentenced on November 15, 2012, by the Honorable James E. Boasberg in the U.S. District Court for the District of Columbia. The judge also ordered Charles to pay more than $1.9 million in restitution to the homeowners and lenders. Upon completion of her prison term, Charles will be placed on three years of supervised release.

According to a statement of offense, signed by the defendant as well as the government, Charles represented herself as the owner of C & O Property Solutions LLC, a company that offered refinancing options to homeowners in the District of Columbia and Maryland whose properties were facing imminent foreclosure.

In fact, she was operating a scheme that ultimately involved 12 homes along with fraudulently obtained mortgages, financial losses for lenders, and evictions for many of the people who turned to her for help.

Charles and others contacted homeowners through solicitation postcards or by telephone, using foreclosure and land records to identify people who were in financial distress.

Charles told the homeowners that they could refinance their mortgage loans with the assistance of financial partners or investors so they could buy time to repair their credit.

She assured them that their names would remain on the property deeds after this “refinancing.” Later, after a period of about six months, according to Charles, the homeowners could refinance the mortgages and remove the partners or investors from the property deeds.

While the homeowners believed they were refinancing their mortgage loans, in actuality they were selling outright their properties to straw purchasers recruited by Charles.

Charles and others paid the straw purchasers fees of up to $10,000 per transaction in return for use of their personal information to purchase properties.

All told, these actions led to mortgage lenders issuing loans of approximately $4 million.

Charles arranged to siphon out roughly $1 million of this money from the properties for herself or her company. She used the money to pay her own personal expenses and to continue perpetuating the scheme.

In addition, Charles required many of the distressed homeowners to pay a monthly “mortgage” payment, which she claimed would be forwarded to the lenders or placed in escrow. Many homeowners paid her, as required, providing a total of about $114,000. Charles forwarded the mortgage payments for a period of time but eventually stopped doing so.

This led to the foreclosure of 12 properties that had the fraudulently obtained mortgages, the evictions of most of the homeowners, and a loss to the lenders in excess of $1 million.

In announcing the sentence, U.S. Attorney Machen and Assistant Director in Charge McJunkin commended the work of those who investigated the case from the FBI’s Washington Field Office. They also acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office, including Assistant U.S. Attorney Zia Faruqui, who assisted with the forfeiture aspects of the case, former Assistant U.S. Attorney Daniel Butler, Paralegal Specialist Donna Galindo, and former Paralegal Specialist Sarah Reis. Finally, they expressed appreciation for the work of Assistant U.S. Attorney Virginia Cheatham, who prosecuted the case.