Couple in VA sentenced for Investment Fraud

United States Attorney for the Eastern District of Virginia, Neil McBride announced in a press release on October 7 that Darrell and Cynthia Underwood from Chesterfield, Virginia were sentenced on charges related to a Ponzi scheme.

Chief United States District Judge James R. Spencer sentenced Darrel to one hundred and twenty months in federal prison and Cynthia was sentenced to thirty six months of federal prison. Their sentences are to be followed by three years of supervised parole. Darrell, 43 and Cynthia, 41 both had pleaded guilty to conspiracy to commit mail fraud. Darrell pleaded guilty to an additional charge of engaging in unlawful monetary fraud.

Judge Spencer has scheduled a restitution hearing in regard to the case on December 15 of this year at 9:15 a.m. Judge Spencer delayed determining the restitution as investigators are still determining the actual figure of the loss. The investigators currently figure the preliminary loss around nine million dollars.

Court documents show that Darrell and Cynthia owned Walkwood Properties. The company operated as a rescue foreclosure business as well as a mortgage investment company out of Midlothian, Virginia. Walkwood Properties offered distress homeowners the opportunity to rescue their homes from foreclosure. The company also offered to investors the opportunity to invest in the home that Walkwood was acquiring through the real estate rescue. The investors were told that they would receive close to fifty percent return on their investment depending on the timing of the investments within sixty to one hundred and twenty days. The Underwood’s would convince investors to invest in 2007 to invest in the properties they purchased. The Underwood’s were paying their investors however the returns were coming from the investments from other investors they had convinced to invest in the program.

Records show that the Underwood’s from April to December of 2007 received about eighteen million four hundred thousand dollars from investors. Walkwood bank records show that two million one hundred thousand dollars was used toward real estate transactions and that the Underwood’s paid approximately sixteen million two hundred thousand dollars to investors. Investigators seized all the accounts controlled by the Underwood’s on December 13^th of 2007. The balance of the Walkwood account show that only seven hundred eighty thousand dollars remained in the account. The company owned to investors at the time of seizure fourteen million dollars. Investigators are still verifying all the accounts and will have a final figure for Judge Spencer on December 15 of this year to determine the restitution to be paid by the Underwood’s.

The Underwood’s and their company Walkwood Properties is also associated with another case involving fraud; the case of The United States v. Colin C. Connelly. Connelly confessed that he conspired with representatives of Walkwood Properties to skim home equity funds of the HUD1 settlement statements. Connelly was sentenced by Judge Spencer on March 10, 2009. He is currently serving twenty four months in federal prison. He was also ordered to pay restitution in the amount of three hundred seventy six thousand four hundred sixty four dollars.

The case against the Underwood’s was investigated by the Federal Bureau of Investigation, the Internal Revenue Service, and the Department of Housing and Urban Development Office of Inspector General, the United States Postal Inspection Service and the United States Secret Service.

The case was prosecuted by Assistant United States Attorney’s Michael Gill and John Adams.