Sixteen people were charged in an indictment unsealed today, for operating a fraudulent telemarketing scheme involving losses of $20 million and almost 300 victims around the country.
According to the U.S. Attorney in Detroit, the telemarketing ring called people offering them cheap deals on homes in Detroit, claiming the houses were bank-owned and up for a sale at a price way under their market value.
In reality, the telemarketers owned the homes, sometimes buying them for no more than $500 and pawning them off to victims at up to $15,000, according to the FBI and the U.S. Attorney.
“They would let them know that you can get in on this now, buy it cheap, we’ll flip it for you and make a significant profit for you,” says Barbara McQuade, U.S. Attorney for the Eastern District of Michigan.
“And so the buyer would buy a house, and within a few weeks they’d be told, guess what? We sold the house for you! And why don’t you buy some more and we’ll keep the proceeds and reinvest it in the next round of properties,” says McQuade.
“So people were lulled into this sense of confidence and would buy maybe 10 more properties, and as a result end up losing a substantial amount of money because these properties were basically worthless.”
“People have 10 or 20 homes … they’re just leaving unattended.”
“We might have people who now have 10 or 20 residential properties on their hands that they bought with the intention of flipping them, and now that they found out they’ve simply been the victims of a fraud scheme, they’re just leaving the homes unattended,” says McQuade.
She says that means taxes aren't being paid on the homes, and they're unoccupied. Instead they’re just “havens for criminal activities” and adding to the city’s epic blight.
“These homes actually are owned, so my hope is they can be forfeited and sold at auction so people can buy them and maybe fix them up.”
The charges include conspiracy to commit mail and wire fraud and international money laundering.
One of the men charged, Erez Arsoni, “likely fled overseas” and hasn’t been arrested, according to a statement released by McQuade’s office and the FBI.
“I don’t want anybody to not invest in Detroit because of this. It’s certainly a great time to invest in Detroit, but of course, you should do your due diligence, you should do your own independent appraisal, you should do your homework first,” McQuade says.