A Baltimore man pleaded guilty yesterday in federal court to conspiracy to commit arson in connection with a rowhouse fire that was arranged, prosecutors allege, by a property flipper who then tried to fraudulently collect on a $60,000 insurance policy.
Paul Anthony Greene, 31, admitted his role in the October 1999 fire at the Southwest Baltimore house and agreed to testify against Scott Dunning Mead. Both men were indicted on arson and mail fraud charges in June. Mead is being held without bail at the Kent County Detention Center.
According to the indictment, Mead, 31, operated his flipping business through a number of corporate names and aliases including Geoffrey Gekko. In a 1987 movie, Wall Street, Michael Douglas portrayed stock market operator Gordon Gekko, whose creed was "Greed is good."
Property records show that Mead bought and resold dozens of houses in the city. The indictment alleges that he purchased low-cost houses and quickly resold them for "fraudulently inflated" prices. It claims he used false documents to get mortgages for his buyers for much more than the lenders would have provided had they known the truth about the value of the houses and the creditworthiness of the buyers.
Months before his indictment, Mead moved to Big Sky, Mont., where he was arrested in June. U.S. marshals returned him to Baltimore after a prosecutor argued at a court hearing in Great Falls, Mont., that Mead might flee if released to return on his own.
A federal agent testified at the hearing that Mead was an airline pilot who used aliases and had nearly $300,000 from his real estate deals in Cayman Islands bank accounts.
The arson charge involved a small two-story rowhouse in the 1700 block of Ramsay St.
Greene agreed to a statement of facts written by Assistant U.S. Attorney Joseph L. Evans. It said Mead acquired the house in an employee's name for $2,500 in 1998 and planned to flip it for $50,000. He soon discovered that he could not flip the house because $26,000 in judgments against the employee would have wiped out his profit, according to the statement.
He decided to recoup his investment "by burning down the property" for insurance, the statement said. He had a fraudulent mortgage prepared and recorded that showed one of his companies, Instant Equity Corp., had lent $60,000 on the house, according to the statement. He then obtained an insurance policy on behalf of Instant Equity.
In April 1999, the statement said, Mead had Greene, who was an acquaintance, move into the house rent-free with the understanding that the property would be burned. Greene took out a renter's insurance policy.
In early October 1999, Greene moved most of his belongings from the house after Mead told him it would be set afire Oct. 9, the statement said. He and Mead then placed full plastic gasoline containers in the living room and left town, according to the statement. A Mead friend ignited the fire late Oct. 9.
No one was injured, the statement of facts said, but an adjacent house that was home to a family with small children was extensively damaged by smoke and water.
Subsequently, Greene collected more than $14,000 on his insurance policy, and Mead unsuccessfully tried to collect $60,000 but the insurance company became suspicious.
Asked if prosecutors know who lighted the fire, Evans said, "No comment, but the investigation is continuing."
U.S. District Judge J. Frederick Motz set Nov. 20 for the sentencing of Greene, who was released under the supervision of pretrial services personnel.