COLUMBIA, S.C. (WCIV) -- A Summerville man pleaded guilty Friday in federal court to one count of conspiracy to commit bank fraud and two counts of filing false tax returns.
court documents, from about April 2006 through at least November
2007, Scott Wickersham and others orchestrated a mortgage fraud scheme utilizing
real estate and mortgage businesses operated at 1940 Trolley Road under the names North American Mortgage Group, LLC, New Freedom Enterprises, LLC and
Realty Executives of Coastal Carolina.
was a real estate agent and part-owner franchisee of Realty Executives of
Coastal Carolina, a loan officer for North American Mortgage Group, LLC, and a
partner in New Freedom Enterprises, LLC. Wickersham was also a partner in
enlisted straw purchasers to buy more
than 70 properties at inflated appraised prices. The properties were mostly
located in the areas of Lake Keowee, Myrtle Beach, Charleston, Edisto Beach, St.
Helena Island, and Tybee Island, Ga.
In order to qualify the investors for
the purchases, Wickersham provided false information to mortgage lenders,
including the investors' income, the investors' available funds in bank
accounts, the investors' resources, the investors' liabilities, the investors'
then-current employment, and the investors' employment history. The real
estate company received large commissions or signing bonuses from the sellers,
which in reality were paid by the mortgage lenders as a result of the inflated
appraisals. The rental company placed renters in the properties, and the
investors signed agreements with the conspirators agreeing to pay the rental
company any appreciation in the value of the properties when they were sold.
investors were paid fees for their participation as were others involved in the
scheme. The bulk of the sales commissions, however, landed in bank accounts
controlled by Wickersham.
used the commission money to promote and further the ongoing criminal conspiracy
by making some mortgage, utility, and homeowners' association payments for the
subject properties, by paying the investors for participating in the scheme, and
by providing substantial down payments for investors on fraudulent purchases.
He also utilized significant portions of the commissions for his own personal
In August 2007, Wickersham had depleted most of the reserves needed to continue the
ongoing fraudulent scheme. Without those funds, and in the slumping housing
market, he could no longer fund all of the mortgages of the investors and he
could not sell the properties for the amount of the mortgage payoffs on the
properties. Therefore, Wickersham told the investors that they were on their own
and that he would no longer be managing and renting the properties and would no
longer be paying the monthly mortgage payments on the properties, which were in
the names of the investors.
As a result,
the investors were left with properties that Wickersham knew were overvalued and
that the investors could not afford.
Individual investors suffered damage to
their credit ratings and other losses when mortgage lenders foreclosed on the
properties. Mortgage lenders suffered losses when the overinflated properties
were sold at then current market values, leaving substantial deficiencies on the
foreclosed loans, resulting in losses to the mortgage lenders, including
federally insured financial institutions, of more than $20
the false information in the loan applications, Wickersham and others obtained
more than $45 million in loan funds from mortgage lenders, including federally
insured financial institutions, to which they would not otherwise have been
to his role in the mortgage fraud scheme, Wickersham also willfully made and
filed false joint U.S. Individual Income Tax Returns, Forms 1040, for calendar
years 2006 and 2007. Both of those returns, which he filed late on Jan. 27,
2009, were materially false because he willfully failed to report income he
received from the real estate/mortgage scheme.
Specifically, on line 22 of the
2006 tax return, he claimed $103,205 of total income when he knew he had at
least $965,402 of total income.
On line 22 of the 2007 tax return, he claimed
$13,383 of total income when he knew he had at least $256,119 of total income.
This under reporting resulted in a tax loss of $206,100 for 2006 and $50,762 for
2007, for a total tax loss of $256,862.
Each return was verified by a written
declaration that it was made under the penalties of perjury.
to pleading to the charges, Wickersham agreed to pay restitution for the
mortgage fraud scheme as well as for the tax charges. He also consented to the
entry of a personal money judgment against him and in favor of the United States
in the amount of $23,977,151, with interest.
He also agreed to not contest
forfeiture in his case.
The maximum penalty Wickersham can receive on the conspiracy charge is a
fine of $1 million and imprisonment for 30 years, plus a special assessment
of $100. And the maximum penalty Wickersham can receive on each of the false tax
return charges is a fine of $250,000 and imprisonment for 3 years, plus a
special assessment of $100.
stated that the case is an ongoing investigation and
U.S. Attorney's Office provided this content.