Raleigh Real Estate Developer Sentenced to Decade in Prison for Real Estate Ponzi Scheme and Firearm Possession Charges
By Realty411 Editorial Staff
This week , a real estate investor in Raleigh , North Carolina , was sentenced to ten years in prison on charges of wire fraud , in violation of Title 18 , United States Code , Section 1343 , and possession of a firearm by a felon , in violation of Title 18 , United States Code , Section 922 ( g ).
According to a breakingnews press release from the Department of Justice , Joshua Matthew Houchins , 36 , ( the defendant ) was also ordered to serve three years of supervised release and to pay restitution to victims in the total amount of $ 1,771,382.25 .
Court documents and arguments made in court revealed that Houchins , the owner of various Raleigh realestate development companies , carried out a Ponzi scheme upon numerous other local investors . Additional charges were added for Houchins , who also possessed a rifle and several rounds of ammunition , after having been already convicted of a felony .
Between 2014 and 2018 , Houchins owned and operated Rossshire Development LLC , Greenstone Ventures LLC , and Modern South Development LLC , and used these entities to carry out a fraud upon his real estate development investors , according to the superseding indictment .
The court found that Houchins solicited investment monies by telling victims that their money would be “ put to work ” on a specific property , and further represented that the investments would be secured by deeds of trust filed with the county register of deeds .
Instead , not all of the investor funds were used on the property for which the investor was solicited . According to court documents , Houchins instead regularly used investor funds on other properties , or on personal expenses .
Without the investors knowing so , the promissory notes were not secured by a deed of trust as they were promised . To make matters even more convoluted , in some cases , Houchins did not even own the property that was part of the investment , and , as such , could not truthfully grant a deed of trust to the investor .
The indictment alleges that after Houchins diverted investor money away from the property on which the funds were supposed to be spent , plus he failed to develop and sell the properties , as he represented he would . Instead , he defaulted on the notes by failing to pay investors their promised returns .
The investors had no recourse , as they were unable to foreclose upon the investment properties because Houchins failed to secure the promissory notes with a filed deed of trust , which resulting in losses to investors .
Houchins specifically pled guilty to
Count Nine , which alleged one instance of the abovedescribed fraud . As a part of the plea , Houchins agreed to make restitution to all victims for losses arising from the scheme and related schemes .
G . Norman Acker , III , Acting U . S . Attorney for the Eastern District of North Carolina made the sentencing announcement this week . The Federal Bureau of Investigation and the North Carolina Secretary of State investigated the case . The Wake County Sheriff ’ s Office , Apex Police Department , and Sanford Police Department also provided assistance . Assistant U . S . Attorney William M . Gilmore served as the prosecutor .
Photo by Tima Miroshnichenko from Pexels
THE SAFETY LESSONS IN THIS STORY :
Always perform extensive background checks on all individuals who solicit funds from you for real estate investments . A simple background search would have raised flags immediately due to the defendant ’ s previous criminal record . Secondly , always confirm with county records that your investments are indeed secured by a deed of trust ( aka “ trust deed ”) to enable recourse in case of a default or fraud .
92