A key figure in a major Cleveland housing scam was sentenced Monday to five years in prison after an exclusive 5 On Your Side investigation exposed how investors were defrauded.
CLEVELAND - New details are emerging following the indictment of a key figure who confessed on camera to his role in a major foreclosure fraud case.
Cuyahoga County prosecutors have indicted Marc Tow, of Costa Mesa, Calfornia. The six charges in the 53-page indictment include engaging in a pattern of corrupt activity, money laundering and theft.
Tow was a partner in a real estate scheme that bought and sold foreclosed homes in Cleveland. Unsuspecting investors were told homes would be rehabbed and neighborhoods revitalized.
In a just released indictment, prosecutors say Tow "devised a scheme to defraud investors or clients by creating false and fraudulent documents" to convince them that homes would be rehabilitated and sold for a profit."
Prosecutors also allege that "the conspiracy utilized real estate professionals, other investors, and employees to recruit individuals to invest or purchase real estate through the enterprise."
Prosecutors estimate more than $100,000 was raised in the scheme.
A business associate of Tow's, Michael Alexander, was referenced but not charged with a crime.
An arrest warrant has been issued for Tow who is believed to be residing in Costa Mesa, California.
Prosecutors described a business enterprise with "an executive management team that provided the structure necessary to allow them to develop and maintain the relationships necessary to conduct its corrupt activities."
Prosecutors say one illegal function of the enterprise was to raise capital by way of various illegal schemes to induce individuals to invest or purchase real estate.
"It was supposed to be a win-win all the way around," said investor Rose Ragan. Instead, she lost $60,000 after trusting Tow with the funds in an escrow account she believed he was managing. The cash was to be used toward purchasing foreclosed homes in Cleveland.
Tow's company was known as EZ Access Funding and he was a business partner with another man whose real name was Michael Pedwell. We discovered he faked his own death in an insurance fraud scheme decades ago, later emerging as Michael Alexander.
The company closed its doors leaving hundreds of investors wondering where their money went. Tow and Alexander seemed to vanish into thin air -- until now.
Our 5 On Your Side investigation found Marc Tow living in Southern Calif., but claiming to have moved his home and business to Kansas.
Tow told NewsChannel5 that his former business partner ripped off investors and is now living in a $12 million home somewhere in Southern Calif. In letters to investors, Tow claims Alexander stole in excess of $2 million and forged his signature on closing documents.
"I didn't run to a foreign country," Tow said. "I'm not running rich."
Tow insists he trusted Alexander and was misled. And in a stunning admission, admits their EZ Access Funding scheme was a fraud.
"You could blame it on me, you could blame it on Michael Alexander," said Tow. "But there are a lot more people at fault in this big game."
Tow insists the sellers of properties failed to disclose the real condition of abandoned and foreclosed homes in order to make profits off unsuspecting investors.
5 On Your Side Chief Investigator Ron Regan will have more on the indictment coming up on NewsChannel5 at 5 p.m.
Sentencing abruptly delayed Monday in Cuyahoga County Common Pleas Court for key player in major foreclosure scam that ripped off investors across the country and left more than 100 homes in Cleveland abandoned.
Defendant accused in major foreclosure scam has pleaded guilty to theft and corruption charges following an exclusive 5 On Your Side investigation.