U.S. Attorney Pat Miles along with U.S. District Judge J. Jonker sentenced the defendants from one to five years in federal prison Thursday. CDC founder Isaac Modert was sentenced to 5 years, his cofounder Aaron Teachout received more than 4 years and others involved each received 15 to 18 months in parison.
In most cases, the defendants received reduced sentences for providing information to investigators, which eventually brought down the mortgage fraud operation.
The defendants in the scheme were “equity stripping,” involving approximately 35 homes. In the scheme, banks would be asked to finance false real estate purchases that were designed to extract funds from lenders, which would then be split among the CDC Investments scheme participants for their own personal gain. The mortgages were not paid and went into foreclosure, resulting in losses of more than $3 million.
The end to the CDC scheme was brought about by a task force made up of the FBI, the US Secret Service, the US Postal Inspection Service, the Department of Housing and Urban Development, the Office of the Inspector General and the Lansing Police Department.