Man pleads not guilty to targeting elderly homeowners in $10M scam

A Chicago man who allegedly scammed more than 100 elderly homeowners on the West Side out of more than $10 million in home equity has pleaded not guilty to federal fraud charges.

Mark Diamond, 60, pleaded not guilty Wednesday to seven counts of wire fraud, according to the U.S. Attorney’s office.

Diamond armed himself with gadgets that disguised his voice and phone number as he targeted homeowners at least 62 years old who qualified for a reverse mortgage loan, according to a 72-page affidavit written by a special agent for the U.S. Department of Housing and Urban Development’s Office of the Inspector General.

Diamond allegedly lied and smooth-talked victims into signing up for reverse mortgage loans he would find ways to benefit from, such as by putting liens on their properties for shoddy or imaginary repairs he claimed to have made. His oldest alleged victim was 98.

The scheme reached back to 2009, according to the HUD affidavit. The feds said they interviewed Diamond’s victims, and their family members, recorded Diamond’s conversations, attended meetings with his accomplices while undercover, and searched Diamond’s office in the 2300 block of North Damen.

The feds say Diamond would target an elderly homeowner and promise to make home repairs based on equity he calculated would be available through a reverse mortgage loan. He offered the loans and allegedly conned the homeowners into agreeing to apply, sometimes unwittingly and sometimes by lying about the terms.

In some cases, Diamond falsely claimed to have valid liens on properties, and was paid loan proceeds directly, the HUD agent alleged. In others, Diamond persuaded elderly homeowners to sign the loan check over to him.

Diamond and his company, OSI Financial Services Inc., entered into a consent decree in 2003 that enjoined him and the company from conducting any loan closings. The Illinois Department of Financial and Professional Regulation also suspended Diamond’s loan originator registration for four years starting April 27, 2010. The alleged scheme violated both orders, according to the feds.

A 47-year-old Chicago woman, Cynthia Wallace, is charged along with Diamond. She solicited homeowners to have home repairs performed by Diamond, knowing he would not perform the work, according to the indictment, which claims she also posed as a representative of the U.S. Department of Housing and Urban Development.

Wallace has pleaded not guilty to nine counts of fire fraud and two counts of falsely pretending to be an employee of the United States, according to the feds.

Diamond is next scheduled to appear in court Aug. 28 for a status hearing before U.S. District Judge Robert M. Dow Jr.