DTWNews

Would you buy a house in Detroit for less than $20,000? Plenty of people would, which is exactly what a recent telemarketing scheme banked on.

Two Michigan residents and 14 people from other states were charged last month for a range of crimes associated with a real estate telemarketing scam. Operating out of call centers in Florida and New York, the scammers made calls to people across the country offering to sell them cheap houses in Detroit.

The telemarketers offered homes to their victims for between $7,500 and $15,000, claiming they were bank-owned homes with previous mortgages that were much higher than the selling price. The opposite was true: the scammers had purchased the homes for no more than $500 each.

Although landscaping can increase recovery value by 100%-200% at selling time, there was no reason these homes should have been valued as highly as the scammers were selling them for. In fact, they only made the neighborhoods where the homes were located worse.

“This nationwide telemarketing fraud not only caused millions of dollars in losses to victims of the scheme, but it also contributed to blight in Detroit neighborhoods,” U.S. Attorney Barbara L. McQuade said in a statement. “Thousands of homes were left to fall into decay as a result of these individuals using Detroit real estate as a commodity to accomplish their fraud.”

None of the victims even moved into the homes, after all. Once investors purchased a house, the telemarketers fooled their buyers into thinking that the homes had been quickly resold at a much higher value. This caused the victims to invest in more houses with the hope of making a profit in the fictional Detroit home flipping market.

Naturally, that’s the point when the telemarketers mysteriously fell out of touch. The scammers used various aliases and changed the name of their company frequently to stay ahead of disgruntled victims and police.

Two Michigan residents are among 16 people charged in what the U.S. Attorney’s Office calls a nationwide fraudulent telemarketing scheme which focused on falsely inflated Detroit house values.

According to McQuade, the scammers got $20 million from over 290 victims across 46 states and sections of Canada. The Federal Bureau of Investigation seized $1 million while executing search and seizure warrants, but most victims have not recouped their losses.

Michigan natives Richard Pierce and Matthew Golden are facing charges including conspiracy to commit mail fraud and wire fraud, conspiracy to commit international money laundering, and wire fraud.