In a ruling that came just in time for Christmas, U.S. District Judge J. Frederick Motz sentenced 42-year-old Baltimore real estate developer Brian McCloskey to 41 months in prison and three years of supervised release.
On Dec. 23, McCloskey was charged with conspiring to commit wire fraud as part of a $20 million investment fraud scheme. He’ll be required to pay over $15 million in restitution.
According to court documents, McCloskey conspired with home builder Patrick Belzner and others to fleece clients of his real estate development business, the McCloskey Group, LLC, out of millions of dollars. Their co-conspirators include licensed attorney and escrow agent Kevin Sniffen, and Mervyn Phelan and Gregory Grantham of IAG Underwriters.
From 2009 to 2011, McCloskey and Belzner approached a number of private lenders requesting loan funds to enable the McCloskey Group to invest in real estate development.
Typically, real estate development groups invest in commercial properties like apartment complexes, hotels or industrial complexes, but the money the McCloskey Group collected was supposed to go into a separate account to establish that the group has liquid funds before being returned to the lender. McCloskey and Belzner also offered substantial interest rates.
The conspirators misrepresented where the money was going, however, and the money was quietly removed from the accounts and used to repay earlier Belzner’s personal loans and the loans previously given to the McCloskey group. When the private lenders demanded their funds back, the group lied about why they couldn’t be returned.
Belzner, Sniffen and Grantham all received prison sentences and will be required to pay millions in restitution. Phelan has pleaded guilty and will be sentenced on Jan. 23.
The action was carried out by President Barack Obama’s Financial Fraud Enforcement Task Force, which aims to proactively and aggressively investigate financial crimes. Task force members are from various federal agencies, regulatory authorities and law enforcement branches. The Federal Bureau of Investigation and the Internal Revenue Service also assisted in the criminal investigation.
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