According to a release issued by the U.S. Attorney's Office, 33-year old Anthony J. DeMarco, III, of Conshohocken, was sentenced on Monday, Oct. 1, to 25 years in prison for conspiracy and fraud charges in connection with a mortgage fraud scheme involving more than $30 million in loans.
Between 2006 and 2009, DeMarco owned and operated DeMarco REI, Inc., a "foreclosure rescue company." Three others charged in the conspiracy with DeMarco also pleaded guilty and were also sentenced today – 39-year-old Eric Bascove, of Blue Bell, was sentenced to 41 months in prison; 38-year-old Sean Ryan McBride, of Pittsburgh, was sentenced to 63 months in prison; and 30-year-old Michael Richard Roberts, of Swedesboro, N.J., was sentenced to 10 years in prison.
DeMarco pleaded guilty on March 20 to a 15-count indictment charging conspiracy, mail fraud, wire fraud, bank fraud and money laundering. U.S. District Court Judge Michael M. Baylson presided over the sentencing hearings. Fines and restitution are pending.
DeMarco REI, Inc. was headquartered in Center City Philadelphia and employed Roberts and Bascove, among others. Roberts was the Vice-Preside of Sales. DeMarco’s business claimed to be able to assist homeowners facing imminent foreclosure. Between June and December 2008, the defendants would scour public records filings to find homeowners in financial distress and pitch a "sale-leaseback" arrangement to them.
The pitch was that DeMarco REI would buy the homeowner’s house, the homeowner would remain in the house and pay rent to DeMarco REI, and when the homeowner got back on his or her feet financially, the homeowner could buy back the house. The defendants solicited straw buyers for properties, used fraudulent documents to obtain mortgage loans from lenders, stole the sellers’ equity in the homes at closing and eventually failed to make the monthly mortgage payments.
DeMarco used the sellers’ equity to run his company and to pay lavish personal expenses. The houses went into foreclosure with the straw buyers listed on the mortgage, the original homeowners facing eviction from their own homes, and the mortgage lenders stuck with loans in default. Only one couple ever acquired the means to repurchase their home but, after they wired approximately $245,000 to DeMarco at his direction and for that purpose, DeMarco instead used their money to purchase a Ferrari for himself, jewelry for his girlfriend, and to pay miscellaneous expenses.
McBride was a title agent and Chief Financial Officer at Settlement Engine, Inc. in Pittsburgh. Settlement Engine closed approximately 30 loans for DeMarco REI from June 2008 to early December 2008. McBride pleaded guilty to conspiracy, wire fraud, bank fraud; Roberts pleaded guilty to conspiracy, wire fraud, bank fraud; Bascove pleaded guilty to conspiracy and bank fraud.
At the time of indictment, the U.S. Attorney's Office Civil Division filed a verified complaint and temporary restraining order to help the original homeowners save their homes. The complaint and temporary restraining order sought novel relief that would bring all the individuals and entities that have a stake in the homes before the court in an orderly process by which the damage caused by the defendants’ alleged fraud could be mitigated.
In 2011, U.S. District Court Judge Michael Baylson approved conversion of the temporary restraining order into an injunction that stopped foreclosures and evictions that were related to the alleged fraud, and that set forth the details of the mediation process. Currently, the majority of the banks and the original homeowners are still in the process of attempting to reach resolutions.
The case against DeMarco and his co-conspirators was investigated by the Pennsylvania Department of Banking, the Federal Bureau of Investigation, and the United States Postal Inspection Service. The criminal case is being prosecuted by Assistant United States Attorney Karen L. Grigsby. The civil case is being handled by Assistant United States Attorney Stacey L. B. Smith.