By Mike Colpitts
A former real estate broker pled guilty to fraud charges in relationship to a mortgage scheme that involved more than $12 million in mortgages, straw borrowers that operated over a course of seven years and real estate investors.
The plea was entered after federal prosecutors worked out a deal with Alexander O. Matthews, whose real estate license was revoked in the state of Virginia in 2007. Matthews, 46, of Dunn Loring, Virginia admitted to orchestrating three mortgage fraud schemes in which he used straw borrowers with good credit scores to obtain nearly $11.5 million in mortgages for three Virginia residential properties.
The former real estate broker did so by causing lenders to receive false qualifying income information about the straw borrowers. Matthews submitted forged documents to lenders to verify that false information made on mortgage applications for the loans on the properties was accurate. The applications were made with lenders over a seven year span from 2005 through 2011.
Matthews has a history of state real estate violations in Virginia dating back to 1999 just three years after he obtained his first real estate license, according to public records filed in the state of Virginia. His license to practice real estate sales was revoked in 2007 after the state licensing regulatory commission found 14 violations of state laws and regulations.
After attempting to refinance the loans and forestall foreclosure, Matthews eventually defaulted on the loans for each of the properties, gaining the attention of federal authorities, including the FBI.
Matthews also admitted to engaging in a fourth scheme in which he promised eight real estate investors highly inflated interest rates to obtain more than $800,000 in mortgages in Maryland and Virginia. He defaulted on the loans after paying back no more than 10% of the amount owed.
The investments were secured by a home and other real estate that was eventually foreclosed by the lenders in the first position on the properties to formally take back the property.
According to court documents, Matthews perpetrated the schemes through a handful of real estate companies, including American Investments Real Estate Corporation (AIREC), AIREC Realty, Kibra Construction, Ezana Corporation and Farmville Group LLC.
Matthews pleaded guilty in federal court to one count of bank fraud and one count of wire fraud. The former real estate salesman faces up to 30 years in prison on the bank fraud count, and 20 years behind bars on the wire fraud charge. Matthews agreed to forfeit $7.9 million in cash and make restitution of about $5.3 million. His sentencing is scheduled for Sept. 30, 2011.