A former Charlotte, N.C., lawyer pleaded guilty mid-trial on July 10, to mortgage fraud related charges, announced Anne Tompkins, U.S. attorney for the Western District of North Carolina. The former lawyer’s plea of guilty is the latest conviction in Operation Wax House, a mortgage fraud investigation which began in 2007 and has netted 91 defendants to date, 72 of which have pleaded guilty.
Michelle Mallard, 46, pleaded guilty to mortgage fraud conspiracy, money laundering conspiracy and embezzlement in violation of the wire fraud statute.
U.S. Attorney Tompkins was joined in making the announcement by John Strong, special agent in charge of the Federal Bureau of Investigation (FBI), Charlotte Division, and Jeannine Hammett, special agent in charge of the Internal Revenue Service, Criminal Investigation (IRS-CI).
Mallard’s federal criminal trial began on July 8, before Chief U.S. District Judge Frank Whitney. Mallard, a/k/a Michelle Crawford, was charged with embezzlement and with serving as a mortgage fraud lawyer for a mortgage fraud cell in the Operation Wax House investigation. According to evidence introduced at trial, Mallard agreed to use her law license to further mortgage fraud primarily in South Charlotte and Waxhaw, N.C. According to trial testimony, the co-conspirators purchased houses at inflated prices in exchange for large kickbacks representing the difference between the true price and the inflated price. Trial witnesses testified that Mallard agreed to pay such kickbacks to other members of the conspiracy and, among other things, accepted bogus checks to make it appear as though buyers had provided money when they had not. According to trial evidence and statements made by the prosecutors, Mallard participated in the mortgage fraud after having stolen over $30,000 from clients by embezzling from her trust account.
Following the presentation of evidence by the government on Monday and Tuesday, Mallard announced to Judge Whitney on Wednesday that she wished to change her plea from “not guilty” to “guilty” on all the counts she was charged with in a second superseding indictment returned by a Charlotte grand jury in September 2012. The remaining five defendants charged in that indictment have already pleaded guilty and are included in the list of defendants below.
Following her guilty plea, Mallard was released on bond pending the scheduling of her sentencing hearing. At sentencing, Mallard faces a maximum prison term of 70 years. In determining Mallard’s actual sentence, the Court will consider the U.S. Sentencing Guidelines, which are not binding but provide advisory sentencing ranges. A sentencing date for the defendant has not been set yet.
Operation Wax House in the Western District of North Carolina is being handled by the Charlotte Division of the FBI and the Criminal Division of the IRS for the Financial Fraud Enforcement Task Force, along with the Securities Division of the North Carolina Secretary of State with respect to a separate prosecution. The Mallard prosecution for the government was being handled by Assistant United States Attorneys Kurt W. Meyers and Maria K. Vento.