CLEVELAND - Mystery, intrigue and fraud lies behind a major housing scam uncovered in an exclusive 5 On Your Side investigation that turned up a faked death, new life and a cross-country search.
It's a story that begins with a company that bought and sold foreclosed homes in Cleveland with the promise to investors that they would be fixed up to revitalized neighborhoods. But our investigation found that never happened.
For example, one home--in nearly-condemned condition-- was originally bought for $900, but within weeks it was sold to an investor for $32,000 without repairing a thing. So we followed the money from Cleveland neighborhoods all the way to southern California and a company called EZ Access Funding.
[Click here for a map of EZ Access-owned properties in the Cleveland area http:// on.wews.com/ xTA0qQ]
It was operated by two men--Michael Alexander who was convicted of tax fraud in 1997 and Marc Tow who was banned from selling securities in 2003. Now, Tow and Alexander are a team buying up 129 homes they claimed were great investments.
Video presentations obtained by NewsChannel 5 show Alexander describing to investors "some exciting and very interesting, but more importantly, some very lucrative information" he would like to share. Later in the same presentation, Alexander claims "we have put together a complete turnkey system whereby you'll be able to take advantage of what we can show you and offer you."
Rose Ragan is an investor who remembers Alexander struck her as "a salesman, gregarious and interesting." Another investor described Alexander as "slick."
But when they learned the real condition of homes they were buying, both Alexander and Tow seemed to vanish into thin air. Meanwhile, back in Cleveland, homes were now sitting vacant and dilapidated.
Two years ago, an EZ Access home exploded, nearly destroying an entire west side neighborhood. Records we obtained show EZ Access continues to pile up up $335,000 in potential housing court fines, $575,000 more in unpaid taxes and a whopping $32 million in contempt sanctions for failure to appear in housing court over the last 3 years.
But our investigation found Alexander has disappeared before. We found he's really Michael Pedwell and that discovery led us to the coast of North Carolina and a stunning discovery.
Twenty-five years ago, Pedwell had faked his own death--for profit. The Coast Guard recovered his boat--but Pedwell had vanished. It was all a scam.
Pedwell later pleaded guilty to insurance fraud and years later resurfaced in southern California as Michael Alexander. And it was there that Alexander and Tow began cashing in on Cleveland.
"The homes were supposedly going to be worth three times what we were buying them for," Ragan said.
Instead, when EZ Access closed its doors, investors like Ragan were left with nothing, and both Alexander and Tow were nowhere to be found--until now.
Tonight at 11 on NewsChannel5, we'll show you what happened when we caught up with one of the most sought after men now suspected of taking part in one of the biggest fraud cases in Cleveland's foreclosure crisis.