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P R E S S   R E L E A S E

FOR IMMEDIATE RELEASE:

Oct. 1, 2012


Serial Fraudster Sentenced In Manhattan Federal Court To 259 Months In Prison For Committing Multiple Real-Estate Investment Scams

Preet Bharara, the United States Attorney for the Southern District of New York, announced that MICHAEL HOWARD CLOTT, a/k/a "Michael Howard," of Bethesda, Maryland, was sentenced today in Manhattan federal court to 21 years and 7 months in prison for engaging in a series of real estate investment and mortgage fraud schemes in which he attempted to steal more than $10 million from his victims. In 2008 and 2009, CLOTT –who had multiple previous fraud convictions – used an alias, stolen identities, and forged documents to lure victims into giving him millions of dollars for purported real estate investments and home purchases. CLOTT then misappropriated the money, using at least $1.3 million to purchase a hair salon for his daughter. After pleading guilty to three fraud schemes in December 2009, CLOTT fled while on bail, and was recaptured in April 2010 in Massachusetts. He was then charged with bail jumping in connection with a fourth investment fraud scheme, to which he also pled guilty, in July 2011. CLOTT was sentenced today by U.S. District Judge Richard M. Berman.

Manhattan U.S. Attorney Preet Bharara said: "Undeterred by his multiple convictions, Michael Howard Clott is the very definition of a 'serial fraudster,' targeting his unsuspecting victims in scam after scam for nearly three decades. At a minimum, today's sentence will prevent him from ensnaring anyone else in his frauds for many years to come."

According to the various charging instruments, other documents filed in Manhattan federal court, and statements made at today's sentencing proceeding:

CLOTT's Investment and Mortgage Fraud Criminal History

Prior to engaging in the crimes for which he was sentenced today, CLOTT already had five felony fraud convictions on his record.
  • From approximately 1982 through 1985, CLOTT used the First American Mortgage Company ("FAMCO"), which he founded in 1979, to defraud investors. In December 1987, CLOTT was sentenced by a federal judge in Maryland to 150 months in prison for orchestrating that fraud.
  • While the FAMCO charges were pending, CLOTT perpetrated a second fraud in 1987, using an entity called First Capital Mortgage Co., and he was sentenced by a federal judge in Maryland to an additional 120 months in prison.
  • While he was pending designation by the Bureau of Prisons for the FAMCO and First Capital Mortgage Co. cases, CLOTT defrauded additional victims, for which he received an additional sentence of 18 months in prison, by a federal judge in Maryland.
  • While he was incarcerated for his first three convictions, CLOTT defrauded inmates and their families at Raybrook Federal Correctional Institution as part of a loan fraud scheme. After he was released from prison in 1994, CLOTT defrauded homeowners of approximately $2.5 million. For these two schemes, Clott was sentenced in Maryland to a total of 150 months in prison, which sentence was subsequently reduced. He was on supervised release for those convictions when he committed the frauds for which he was sentenced today.
The Four Fraud Schemes for which CLOTT was Sentenced Today

In 2008 and 2009, while on supervised release from his 1994 conviction, CLOTT returned to defrauding investors. In each of the fraud schemes for which he was sentenced today, CLOTT used the alias "Michael Howard" in an effort to conceal his true identity and his prior criminal conduct. In CLOTT's first scheme, he pretended to have purchased a Margate, New Jersey, apartment for the victim, and to have provided a loan of $859,000 to fund the purchase. In fact, the whole deal was a scam, and CLOTT neither purchased the apartment nor fronted any loan money. CLOTT caused the victim to pay him $455,000 toward the repayment of the purported loan, and then misappropriated those funds.

In his second scheme, which he committed in May 2008, CLOTT fraudulently sought to obtain a $1 million mortgage on a property in Purchase, New York, using a stolen identity and a forged power of attorney.

In a third scheme, in mid- to late 2008, CLOTT defrauded a Maryland family of approximately $200,000 by representing that he was investing their money in real estate. Instead, he stole it.

In his fourth scheme, which he committed in 2009, CLOTT obtained access to approximately $9 million by fraudulently representing to the victim-investment company that the funds would be held in escrow to enable him to engage in real estate transactions for the benefit of investors. Instead, CLOTT stole millions of dollars, using the money to, among other things, purchase a hair salon and spa for $1.3 million for his adult daughter. Through forfeiture proceedings, the hair salon and spa and approximately $660,000 cash were released to the victim-investment company.

CLOTT was charged with the first three fraud schemes in 2009, and pled guilty to those schemes on December 14, 2009. After the Government learned from victims that CLOTT was committing a fourth fraud and sought his immediate remand into custody, CLOTT fled. He remained a fugitive until he was arrested near Boston, Massachusetts, on April 21, 2010. On July 29, 2011, CLOTT entered a second guilty plea to a Superseding Information charging him with wire fraud, in connection with the fourth fraud, and bail jumping.


* * *

In addition to the prison term, Judge Berman sentenced CLOTT, 59, to three years of supervised release, and ordered him to pay a $600 special assessment fee. Judge Berman also ordered CLOTT to pay a total of over $2.6 million in restitution, and to forfeit over $5 million.

CLOTT also faces pending mail and wire fraud charges in the District of Massachusetts for additional conduct he allegedly committed in early 2010, while he was a fugitive from justice from the Southern District of New York.

Mr. Bharara praised the FBI for its exceptional work on the investigation. He also thanked the U.S. Marshals Service for its assistance.

This case is being handled by the Office's Complex Frauds Unit. Assistant U.S. Attorneys Amie N. Ely and Michael Lockard are in charge of the prosecution.


Source: United States Attorney's Office for the Southern District of New York


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