Carolinas mortgage-fraud leader fined $2 million, sentenced to 6 months

10/17/2013 10:46 PM

10/17/2013 10:53 PM

Mark Dain – the ringleader of one of the largest mortgage fraud schemes in the Carolinas – has been ordered to pay a Myrtle Beach bank nearly $2 million in restitution as part of an agreement with prosecutors that includes a six-month prison sentence for a real estate scam that ensnared hundreds of investors, according to documents filed in federal court.

Dain must pay TD Bank – formerly Carolina First – in Myrtle Beach for seven fraudulent loans his Total Realty Management company obtained for buyers in the Craven’s Grant neighborhood in Georgetown and another project in North Carolina. Craven’s Grant, a 140-acre site along Winyah Bay, was supposed to have 292 homes, but none of the lots were developed and most of the loans went into foreclosure. Home sites there that once sold for up to $400,000 apiece have sold for as little as $2,000 at foreclosure auctions, county property records show.

All told, Dain must repay $7.1 million to four banks, according to a restitution order approved this month. Those banks likely won’t see but a portion of the money that’s owed, however, because Dain’s sentencing agreement calls for him to pay just $250 a month. It would take more than 2,366 years for Dain to make full restitution at that rate.

Federal guidelines called for Dain to receive a prison sentence of between seven years and nine years, but prosecutors agreed to the reduced sentence because they say Dain has cooperated in the mortgage fraud investigation. Dain’s partner in Woodbridge, Va.-based TRM, Mark Jalajel, has not yet been charged.

During his sentencing hearing this month in Alexandria, Va., Dain said he had “no excuse” for his actions, according to an account of the hearing by The Washington Post reporter Tom Jackman.

“My life in my mid-20s was a series of immoral and terrible decisions,” Dain said, according to Jackman’s reporting. “I take absolute accountability for that.”

Court documents in Dain’s criminal case show TRM falsified loan applications at Craven’s Grant and other subdivisions by inflating buyers’ wages, misrepresenting their job duties and submitting false tax forms and pay stubs. The company also deposited money into buyers’ bank accounts to make it appear as if they had assets that did not really exist. The buyers returned the money after the loans were approved.

TRM’s employees promised buyers they would be able to flip the home sites for a profit, but most buyers were stuck with the properties – and high-interest loans – when the real estate crash hit.

Dain also has ties to the Legacy Estates subdivision in North Myrtle Beach – another project where home sites were sold to investors at inflated prices and the loans went into foreclosure before homes could be built.

Dain’s link to the Legacy Estates subdivision involves payments funneled to him following that project’s land sales through a North Myrtle Beach real estate services company. Some of the HUD-1 closing statements for Legacy Estates show six-figure commissions being paid to the North Myrtle Beach company, which then wired the money to a company called Carolina Waters, which was owned by Dain and Jalajel.

Legacy Estates was marketed by Ron LeGrand, a partner in Legacy Development and a self-proclaimed real estate guru known for his get-rich-quick seminars. Court documents show LeGrand had borrowed money from Dain and Jalajel to start a W.Va.-based company called Mountain Country Partners. Court documents show at least $5.6 million funneled through Legacy Estates lot sales was for repayment of that loan, not for sales commissions as reflected on the HUD-1 statements.

The developer of Legacy Estates was forced into involuntary bankruptcy liquidation a year ago.

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