United States Attorney
Eastern District of Pennsylvania
Tuesday, March 20, 2012
Foreclosure Rescue Scammer Pleads Guilty in Philadelphia
PHILADELPHIA - Anthony J. DeMarco III, 33, of Conshohocken, Pa., pleaded guilty today to conspiracy and fraud charges in connection with a mortgage fraud scheme involving more than $30 million in loans. From 2006 through July 2009, DeMarco owned and operated DeMarco REI Inc., a foreclosure rescue company. A 15-count indictment charged DeMarco with conspiracy, mail fraud, wire fraud, bank fraud and money laundering. Three others were charged in the conspiracy with him. Michael Richard Roberts, Sean Ryan McBride and Eric Bascove previously pleaded guilty. DeMarco will be sentenced on June 27, 2012. He faces approximately 210 to 262 months in prison under sentencing guidelines.
DeMarco REI was headquartered in Philadelphia and employed Roberts and Bascove. 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 became financially stable, 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 and 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 and bank fraud, and faces a sentence of approximately 63 to 78 months in prison when sentenced on June 27, 2012; Roberts pleaded guilty to conspiracy, wire fraud and bank fraud, and faces approximately 78 to 87 months in prison when sentenced on May 7, 2012; Bascove pleaded guilty to conspiracy and bank fraud, and faces approximately 78 to 97 months in prison when sentenced on June 27, 2012.
At the time of indictment, the U.S. Attorney’s Office for the Eastern District of Pennsylvania’s 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.
This law enforcement action is part of President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes. For more information on the task force, visit: www.stopfraud.gov.
The case was investigated by the Pennsylvania Department of Banking, the FBI and the U.S. Postal Inspection Service. The criminal case is being prosecuted by Assistant U.S. Attorney Karen L. Grigsby. The civil case is being handled by Assistant U.S. Attorney Stacey L. B. Smith.