WILMINGTON, NC (WECT) – A man from Wilmington pleaded guilty Wednesday in federal court to wire fraud and money laundering.
According to the Department of Justice, Daniel Ostby, 41, and his co-defendant Curt Vanderzee formed a construction company to "flip houses" to cover their money laundering scheme.
The criminal report filed says the partners would buy real property, renovate it, and then quickly sell the property for a profit.
Ostby told friends they could go into business with him and make $20,000 to $40,000 per property. Over 17 business-LLC's were formed with family members and acquaintances, according to the DOJ.
Once the businesses were established, the investigation revealed Otsby took partners to an individual who "specialized" in obtaining credit for start up businesses. When the credit cards were obtained, cash advances were taken and used to open a business LLC account.
According to the DOJ, Otsby and Vanderzee charged over $1 million on the business credit cards, which were all linked to various businesses they owned or linked to other businesses they had some financial interest.
Once money was received they would funnel it back to the businesses bank accounts and then use the money to pay their monthly salaries, personal expenses, and minimum monthly credit card fees.
Additionally, they would submit mortgage applications with misrepresentation of their employment, monthly income and assets that were ultimately approved.
It is estimated that Ostby and Vanderzee committed over $3.7 million in mail and wire fraud.
The maximum penalty for wire fraud is up to 30 years in prison, and the maximum penalty for money laundering is up to 20 years behind bars.