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Md. men sentenced in $16M loan scheme
Question of the Day
Two Maryland men have been sentenced to prison in a scheme to steal nearly $16 million from a Virginia residential property management company, U.S. Attorney Neil H. MacBride in the Eastern District of Virginia and FBI Assistant Director Valerie Parlave, who heads the bureau’s Washington field office, said Friday.
Robert F. Rood IV, 44, of Potomac, Md., was sentenced to 120 months in prison and Nikolaos M. Hepler, 31, of Gaithersburg, Md., was sentenced to 30 months in prison by U.S. District Judge Claude M. Hilton in Alexandria. Both men pleaded guilty in October.
According to court documents, Rood conceived and led a scheme to defraud the Vienna-based Southern Management Corporation Retirement Trust (SMCRT), a pension plan established by SMC for its employees. As of Dec. 31, the plan’s assets were more than $30 million, and prior to April 2006 SMCRT generally managed its own investments, which included short-term, high-interest loans to real estate developers.
In April 2006, the documents show, Rood persuaded SMC’s president and CEO to let Rood locate borrowers, negotiate loans to them, prepare the loan agreements, promissory notes and trust deeds and present loan application packages to the SMCRT loan committee, which would decide whether to purchase the proposed loans. If the committee decided to do so, it would wire the money to purchase the loan to a settlement company designated by Rood.
Rood used the money from SMCRT to fund the loan and would obtain from the borrower an executed loan agreement, promissory note and trust deed, which he would assign to SMCRT. In most cases, the borrowers were not aware of SMCRT’s involvement in the process.
Prosecutors said Rood represented to both SMCRT and the borrowers that he would set up escrow accounts for the payment of interest to SMCRT and for construction payments to the borrowers. Instead, they said, the moneys from all the loans were co-mingled into Rood’s principal bank account. When the project was finished and sold, the borrower was to pay back the amount borrowed to SMCRT.
From April 2006 to around October 2007, the court documents show that Rood sold to SMCRT 32 mortgage loans he had originated, of which 24 went into default after they were funded by SMCRT. One loan, referred to as the “K Street” loan, never closed because the title company was unable to clear title to the property, and Rood simply kept the money that SMCRT paid him to purchase the loan. Two other loans — the “Eastern Shore” and “Accom” loans — involved SMCRT loans that the borrowers refinanced with different lenders and sent their payoffs to Rood, who kept the payoff monies.
In each case, prosecutors said, Rood, assisted by Hepler, his employee, misrepresented to SMCRT that the loans were in place and performing satisfactorily, including Rood’s making of the monthly interest payments to SMCRT on the nonexistent loans. When SMCRT requested an independent review of Rood’s accounts, Rood engaged Lloyd M. Mallory, a Maryland certified public accountant, to perform a review of the loans, loans, disbursements and escrows. The accountant issued a report, which was actually prepared by Rood and Hepler, that falsely showed the status of the loans and the funds held by Rood.
Mallory was sentenced to 24 months in prison in August following his plea of guilty to the conspiracy.
The case was investigated by the FBI’s Washington field office. Assistant U.S. Attorneys Michael E. Rich and Uzo E. Asonye prosecuted the case.
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