ATHENS, Ga. — A Superior Court judge has dismissed racketeering charges against a former Athens developer who authorities say masterminded a massive mortgage fraud scheme involving new home sales at a Clarke County subdivision.
Prosecutors allege Brian Dupree conspired with others to use fraudulent appraisals and other deceptions to get lenders to grant loans for homes at the Milford Hills subdivision that were significantly more than the properties were worth.
Authorities at the time called it the largest mortgage fraud scheme in state history.
In a ruling this month, Western Judicial Circuit Chief Judge Lawton Stephens said prosecutors allowed too much time to pass – from the time Dupree and others were arrested in April 2006 until they were indicted in March this year.
“The excessive delay of almost five years between arrest and indictment receives important consideration” in the decision to dismiss charges, Stephens said.
Since Dupree’s arrest, documents crucial for his defense disappeared and witnesses could not be found, according to his attorney, Edward Tolley. A lot of the documents involved Dupree’s dealings with a Gwinnett County bank and were lost or destroyed after the bank was taken over by the federal government a couple of years after Dupree’s arrest, according to Tolley.
“Brian’s ability to defend himself went away three or four years ago,” the defense attorney said.
Though an Athens-Clarke police detective initiated the investigation in May 2005, the case was later taken over by the state attorney general’s office.
Senior Assistant Attorney General David McLaughlin has 30 days to appeal the judge’s dismissal. McLaughlin could not be reached for comment.
Tolley maintains Dupree is not guilty of any crimes.
“The real culprit was the sub-prime lending practices” of banks and other financial institutions that approved loans for unqualified homebuyers, Tolley said. “There was no criminal behavior on my client’s part.”
The indictment alleges Dupree “took advantage of the abundance of so-called investment buyers and ‘straw buyers’ and the culture of residential mortgage fraud that was rampant between 2003 and 2006.”
In mortgage fraud schemes such as the one alleged at Milford Hills, straw buyers are paid to buy homes at above-market prices, and when the deals close, sellers kick back the extra profits to the conspirators. The conspirators promise that a management company will make the mortgage payments, but the payments soon stop, the straw buyers default on loans, and their houses are foreclosed on, experts said.
By November 2004, when the fraud scheme was “well underway,” the indictment alleges, Dupree began to conspire with Marc Canty and Rashid Wilson, who were paid more than $1 million to recruit buyers for Milford Hills properties.
Canty and Wilson received “kickbacks” from buyers that went directly to them or their companies, Premiers Credit Solutions Inc. and The Loan Centre, according to the indictment.
Most of the homes purchased by straw buyers sat unoccupied, and legitimate homebuyers saw their neighborhood turn to shambles, with trash-strewn and overgrown yards. Many straw buyers bought multiple homes.
“Dupree kept building and kept selling ... homes in Milford Hills even though nobody moved into the homes and the subdivision was deteriorating rapidly,” the indictment states. “Amenities were never built. Street signs were not even put up.”
The first Milford Hills home was foreclosed on in February 2005, and eventually, houses were getting foreclosed almost as fast as new houses were sold, according to the indictment.
“Of the approximately 95 properties sold by fraudulent transaction(s), 88 were foreclosed by 2008,” the indictment states. “All told, lenders lost in excess of $10 million.”
Between April 2006 and June 2008, authorities arrested Dupree and more than 20 other people, all on state racketeering charges.
Only Dupree, Canty and Wilson were indicted, and charges against all others were dismissed.
Authorities never found and arrested Wilson, so he is not represented by an attorney who could file a motion to dismiss the indictment.
“The sad thing about this case is, 25 good people were arrested, and almost to a man and woman they lost their jobs and livelihoods even though they never were indicted,” Tolley said. “A lot of damage was done by these arrests.”