Home-Building Fraud

A man from Chesterfield, Missouri, received 14 years in prison and was ordered to pay nearly $1.15 million in restitution for defrauding individuals in a luxury home-building fraud scheme.^[1]

The defendant in this case accepted payments from three buyers to build houses on the same lot, and received more than $500,000 from the victims, yet no house was completed, nor did the defendant refund the money. In fact he used a portion of the money to purchase luxury vehicles for himself and to pay his own mortgages.^[2]

The indictment for the defendant charged him with three counts of mail fraud, one count of wire fraud, and two counts of money laundering.^[3]

Mail Fraud
Mail fraud is criminalized by 18 U.S.C. § 1341.
Section 1341 is a rather dense and convoluted statute. Under this section, it is a crime

• for a person who has devised or intends to devise any scheme or artifice
• to defraud, or
• to obtain money or property by means of false or fraudulent pretenses, representations, or promises, or
• to sell, dispose of, loan, exchange, alter, give away, distribute, supply, or furnish or procure for unlawful use any
• counterfeit or spurious coin, obligation, security, or other article, or
• anything represented to be or intimated or held out to be such counterfeit or spurious article,
• for the purpose of executing such scheme or artifice,
• to place in any post office or authorized depository for mail matter,
• any matter or thing whatever to be sent or delivered by the Postal Service, or
• to deposit or cause to be deposited any matter or thing whatever to be sent or delivered by any private or commercial interstate carrier, or
• to take or receive therefrom, any such matter or thing, or
• to knowingly cause to be delivered by mail or such carrier according to the direction thereon, or
• at the place at which it is directed to be delivered by the person to whom it is addressed,
• any such matter or thing.

A violation of section 1341 can result in a fine of up to $1,000,000, imprisonment for up to 30 years, or both.

Wire Fraud
Wire fraud is criminalized by 18 U.S.C. § 1343. Under section 1343, it is a crime for a person

• who has devised or intends to devise a scheme or artifice to
• defraud, or
• to obtain money or property by means of false or fraudulent
• pretenses
• representations, or
• promises
• to transmit, or cause to be transmitted by means of wire, radio, or television communication, any
• writings
• signs
• signals
• pictures, or
• sounds

• for the purpose of executing the scheme or artifice.

A violation of section 1343 can result in a fine of up to $1,000,000, imprisonment for up to 30 years, or both.

Money Laundering
We have previously discussed money laundering here.

Home-building fraud is closely related to mortgage fraud, which is quickly becoming one of the most investigated and prosecuted crimes in the country.^[4] We fully expect to see many more prosecutions of this type in the future.

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[1] Homebuilder Sent to Prison for 14 Years for Fraud, St. Louis Bus. J., Aug. 12, 2005, available here.
[2] Man Gets More than 14 Years for Fraudulent Home-Building Scheme, Associated Press, Aug. 12, 2005.
[3] United States Dept. of Justice, Press Release: Chesterfield Man and East St. Louis Man are Indicted on Fraud Charges in Connection with Luxury Home Scheme, Jan. 6, 2004, available here.
[4] Federal Bureau of Investigation, Financial Crimes Report to the Public, D1, available here.