Posted February 20, 2011

http://baltimore.citybizlist.com/1/2011/2/20/Three-Convicted-in-Metro-Dream-Homes-Ponzi-Scheme.aspx#

GREENBELT - Three defendants were convicted for their roles in the $70 million "Metro Dream Homes" Ponzi scheme Friday in the United States District Court for the District of Maryland.

Chief Financial Officer Michael Anthony Hickson, 46, of Commack, N.Y.; President Isaac Jerome Smith, 46, of Spotsylvania, Va.; and Vice President of Operations Alvita Karen Gunn, 31, of Hanover, Md., were each found guilty of 15 counts of wire fraud, one count of conspiracy to commit wire fraud and one count of conspiracy to commit money laundering. Hickson was also convicted of perjury.

Sentencing for Smith and Gunn is set for June 27. Sentencing for Hickson is set for July 1. They face up to 20 years on each of the wire fraud and money laundering charges, and Hickson faces up to an additional five years for perjury.

As he waited for the verdict to be read, Smith rocked back and forth slowly in his chair and bit his lower lip. His attorney, Michael Lawlor, had told the jury that Smith was an honorable man with 20 years of military service who would not knowingly cheat anyone but was taken in by the charisma of Metro Dream Homes founder Andrew Hamilton Williams Jr.

Lawlor said Smith sympathized with all the investors who lost money with Metro Dream Homes -- a number prosecutors said was more than 1,000, but the defense said was closer to 650.

"It's a sad and terrible thing and we're aware of that and these people were lied to, and they were lied to by Andy Williams," Lawlor said in his closing arguments.

Lawlor also said that Smith, with no business background, could not have known that the company was illegitimate. He was merely an early investor that Williams had plucked and elevated to a meaningless office to take advantage of his reputation and military connections.

The jury thought otherwise. As the first of 17 guilty verdicts against him was read, Smith dipped his head, his chin hitting his chest.

Williams started companies called "Metro Dream Homes," "POS Dream Homes," "Metropolitan Grapevine LLC," and "POS DH LLC" that had offices in Maryland, the District of Columbia, Virginia, North Carolina, New York, Delaware, Florida, Georgia and California.

They promised investors that if they gave at least $50,000 up front, the company would invest it in ATMs, electronic phone card kiosks and flat-screen televisions showing video ads at local businesses. Those ventures were supposed to pay off the investors' mortgages in five to seven years.

Instead they brought in almost no revenue and the companies relied on new investments to pay off the old investors' mortgages. The operation crumbled after the Maryland Securities Commissioner put out a cease-and-desist order in August 2007, preventing the companies from signing on new investors.

Williams is set to be tried Nov. 1. Smith's lawyers, Gunn's lawyer and Hickson, representing himself, had all attempted to cast Williams as the scheme's "mastermind" and the defendants as unwitting participants acting in good faith.

Gunn's lawyer, Elita Amato, said her client thought she was part of a legitimate company with "great ideas but bad implementation" that just needed more time to work through its growing pains.

Hickson said that as the CFO of one of Williams' many companies, he tried to warn Williams that revenue seemed to be a problem in his business model. But Williams put his concerns to rest, in part by funneling funds between companies.

"Now you have to believe Mr. Williams did not take kindly to my reports," Hickson said in his closing arguments. "Mr. Williams wasn't saying, 'Michael, thank you, I really appreciate you telling me that my company may be a scam.' ... He began to explain to me the uniqueness of his program. He showed me things, he demonstrated things by his actions."

But prosecutors presented financial documents and company e-mails that convinced the jury that by November 2006, Smith, Gunn and Hickson all knew that revenue wasn't coming in and the business model relied almost entirely on finding new investors.

Instead of blowing the whistle, they allowed, and in some cases encouraged, Williams to find new investors by hosting presentations at luxury hotels in the District and Beverly Hills, Calif. At those presentations he routinely told prospective investors that the ATMs, kiosks and flat-screen ads generated $20,000 of revenue per investor, per month.

The three defendants also accepted six-figure salaries ($100,000 for Gunn and $200,000 each for Smith and Hickson), used company cars and corporate housing and took trips to the Super Bowl and the NBA All-Star Game on company money.

Hickson declined to comment after the verdict. Lawyers for Smith and Gunn both said they would appeal. During the trial they filed multiple motions to have their clients tried separately on the grounds that Hickson, a certified public accountant, was compromising all of their cases by acting in his own defense.