A Pennsylvania minister who ran two Ponzi schemes and bilked New Jersey churchgoers out of more than $1 million has pleaded guilty to mail fraud and wire fraud.
Terence Mayfield of Phoenixville faces up to 40 years in prison and fines in excess of $250,000. Sentencing is set July 14, before U.S. District Judge Joseph H. Rodriguez.
Prosecutors said Mayfield, 47, fleeced members of the Church of Grace and Peace in Toms River, N.J., by getting them to invest in fraudulent real-estate schemes. One of the scams involved foreclosure bailouts. The scams were uncovered by an attorney who belonged to the church and notified authorities.
Mayfield had been a guest minister at the church and soon pitched an opportunity offered by his Pennsylvania company, known as 4 Life LLC.
“Soon after he first spoke to congregants, Mayfield began soliciting money from church members and holding meetings at the church and elsewhere,” prosecutors said.
Mayfield positioned himself as “a legitimate investment advisor” and required each potential investor to pay between approximately $1,000 and $1,500 as an “entry fee†to the [My Home Banc] program,” prosecutors said.
Congregants were told that My Home Bank, or MHB, “would help investors eliminate debt and build wealth through investments in income-generating real estate,” prosecutors said. Mayfield also suggested investing in distressed real estate.
“After paying the fee, potential investors met with Mayfield regarding the investment program, at which time Mayfield told the potential investors that he would identify and provide them with information about available income-generating properties which would generate positive cash flow for the potential investor,” prosecutors said.
In some instances, Mayfield advised church members who did not have cash at their disposal to refinance their homes, prosecutors said.
Mixing investors’ money with his personal money also was part of the scheme, prosecutors said.
“Mayfield admitted that he did not maintain the funds in escrow accounts as he told investors would be the case,” prosecutors said. “[He] also admitted that aside from helping two investors identify and arrange for the purchase of an investment property in Charlotte, N.C., he never purchased or arranged for the purchase of investment properties for investors from the church as part of the mail fraud. Mayfield used the investors’ funds to repay earlier investors and to pay his personal expenses.”
At the same time, prosecutors said, Mayfield conned both investors and homeowners in a foreclosure-bailout scheme. The homeowners lost at least $75,000 in the deal, which involved purported real-estate transactions in Pennsylvania and Georgia.
Beginning in May 2007, Mayfield solicited prospects to invest in a program he referred to as “foreclosure bailouts,â€Â prosecutors said.
“To induce these individuals to invest in this program, Mayfield explained that the investor would buy the home of a homeowner who was at risk of foreclosure and then lease the home back to the homeowner for a two-year period. The homeowner would then use a portion of the proceeds to pay the investor an ‘investment fee’ and Mayfield a ‘broker’s fee.’
“Additionally, the homeowner would place two years’ worth of rent payments into an escrow account, which would be maintained by Mayfield, as a security deposit,” prosecutors continued.
“At the end of the two-year period, Mayfield explained, the homeowner would have the opportunity to repurchase the home from the investor. Mayfield, as part of the scheme and to induce a homeowner to participate in a ‘foreclosure bailout,’ made substantially the same representations to homeowners with a significant exception: That the escrow account funds would not serve as security for the investor, but rather would be ‘drawn down’ on a monthly basis and used to pay the homeowner’s monthly rent payments,” prosecutors said.
“Mayfield admitted that at the closing of the ‘foreclosure bailout’ transactions, he directed the homeowner to either wire transfer or directly deposit funds intended to be maintained in an escrow account into his company’s bank account. Mayfield admitted he did not maintain the funds in escrow, but instead used the funds for his own benefit,” prosecutors said.