After falsely claiming that his company could help homeowners who were facing foreclosure, an Ohio man was charged by a federal grand jury for fraud, money laundering and tax evasion in connection with his mortgage “fix-it” business.
Gary Jones of Columbus, Ohio, ran 3Arck Capital Group, a company that claimed it could erase or modify mortgages that homeowners couldn’t pay, the U.S. Attorney’s Office said.
According to the indictment, between January 2010 and March 2012, Jones was the managing member of 3Arck Capital Group, LLC and is alleged to have been the sole authorized signatory on several bank accounts for the benefit of 3Arck, which had a banking relationship with Fifth Third Bank, PNC Bank and J.P. Morgan Chase Bank. Jones also allegedly partnered with an individual in an investment company known as North American Realty Services Corporation (NARSCOR).
Between May 2009 and September 2012, Jones, by himself and using his company and partnership with NARSCOR, raised funds under false pretenses through a process called “mortgage amelioration.” Through these modifications, Jones represented that he could eliminate or modify mortgages held by banks, based on theories that the mortgages were invalid or illegal because the banks had no right to foreclose on the loans. Jones represented that, after a long process, the banks would acknowledge that the mortgages and/or foreclosures were not legitimate.
Jones represented that he could present claims to the banks and the courts on behalf of property owners, and that he could either force the banks to return properties that already had been repossessed through foreclosures, or that he could get restitution for property owners upon whom the foreclosures had occurred. Further, according to the indictment, he represented that the property owners then either could have their mortgages completely eliminated, or at the very least, modified with lower payments and a better term. He also told those who already had lost their homes that they would be rewarded with monetary compensation or the return of bank-owned properties.
Although he told the customers that he had worked on many “mortgage ameliorations” before and that he had a 100 percent success rate, the indictment alleges that he actually had a 0 percent success rate and that no mortgages ever successfully were eliminated, nor their payments reduced based on the program.
For each “mortgage amelioration” he worked on, he charged between $4,000 to $8,000 for at least 13 people between 2010 and 2012, according to the indictment. In total, he collected $74,700 in fees from those customers. Despite telling the customers that these fees were refundable and would be kept in escrow accounts, the money was deposited into Jones’ personal bank account and no application fees ever were refunded.
"Mr. Jones’ actions not only caused negative ramifications to those financially connected to him, but also the honest taxpayer when he committed significant tax fraud violations as detailed in the indictment,” said Kathy A. Enstrom, Special Agent in Charges, IRS Criminal Investigation, Cincinnati Field Office. “Honest and law-abiding citizens are fed up with the likes of those who use deceit and fraud to line their pockets with other people’s money as well as skirt their tax obligations.”
Jones was charged with 13 counts of mail fraud, eight counts of money laundering and four counts of failing to file income-tax returns. According to his indictment, he earned $280,340 in 2009, $1.1 million in 2010, $880,791 in 2011 and $146,555 in 2012 and did not file returns or pay taxes on the income.
He could receive up to 20 years in prison and a $250,000 fine for each mail-fraud charge; 10 years in prison and a $250,000 fine on each money-laundering charge; and one year in prison and a $250,000 fine for each tax charge.