Q. Whatever happened to Daniel Ostby and his partner regarding their guilty plea last year to federal charges including money laundering? Have they been sentenced yet?
This press release was sent by the U.S. Attorney’s Office to the StarNews on Sept. 19, 2012:
RALEIGH – United States Attorney Thomas G. Walker announced that in federal court today DANIEL P. OSTBY, 41, was sentenced by United State District Judge Terrence W. Boyle to 72 months imprisonment, 5 years supervised release, and was ordered to pay a $200 special assessment and $1,255,209.27 restitution. On December 7, 2011, OSTBY pled guilty to wire fraud, in violation of Title 18, United States Code, Section 1343, and money laundering, in violation of Title 18, United States Code, Section 1956(a)(1)((A)(i).
According to the Criminal Information filed on October 28, 2011, OSTBY and his co-defendant, Curt Vanderzee, formed DC Development of North Carolina, LLC, which held itself out as providing construction services. OSTBY and Vanderzee developed a scheme to “flip” houses, in which they would buy real property, improve the property by building on it, and then quickly sell the property for a profit. OSTBY also solicited friends and acquaintances to go into business with him by telling them they could “flip” houses and make $20,000.00 to $40,000.00 per property. Over 17 business-LLC’s were formed with family members and acquaintances.
The investigation revealed that once the businesses were established, OSTBY took the business partners to an individual who “specialized” in obtaining credit for start up businesses. Once the business credit cards were obtained, cash advances were taken and used to open a business LLC bank account. OSTBY told the business partners that they could draw a monthly salary, and pay personal expenses with the account to help build up their credit. The money used to pay for those items were either credit card withdrawals or lines of credit obtained at various banks since the businesses had no source of income.
From 2007 to January, 2009, OSTBY and Vanderzee charged over $1,025,000.00 on the business credit cards, which were all linked to various businesses either owned by OSTBY and/or Vanderzee or linked to other businesses to which they had some financial interest. Once the money was received, they would funnel the money back to the businesses bank accounts and then use the money to pay their monthly salaries, personal expenses, the minimum monthly credit card payments, and in many instances fund the down payments of lots and properties being purchased. Additionally, OSTBY and Vanderzee submitted mortgage applications to purchase real estate, which had misrepresentations of their employment, monthly income, and assets. The financial institutions, relying on the information submitted, approved the applications, and either mailed or wired the funds to the closing real estate attorney’s bank account. It is estimated that OSTBY and Vanderzee committed over $3.7 million in mail and wire fraud.
Investigation of this case was conducted by the Internal Revenue Service and the United States Secret Service. Assistant United States Attorney Felice McConnell Corpening is serving as prosecutor for the government.
A. Daniel P. Ostby, who pleaded guilty in December 2011 to federal charges of wire fraud and money laundering, has yet to be sentenced.
Ostby was originally scheduled for sentencing May 22 in Raleigh, but his attorney, Dennis H. Sullivan, Jr., requested a continuance. Court documents cite “voluminous discovery and financial records” as the reason for the delay.
Sullivan’s motion states, “There are complex issues regarding property valuations, foreclosures and bankruptcy that have a significant bearing on the proposed sentencing guideline. More time is needed to complete research and review of the documents.”
When asked about the status of his client and the pending sentencing, Sullivan said, “Mr. Ostby is not in custody. The court date will be set in June.”
Ostby faces up to 50 years in prison for his crimes.
Ostby’s partner, Curt Matthew Vanderzee, pleaded guilty to money laundering and wire fraud charges March 15, 2012.
Vanderzee was sentenced to 12 months and one day, per count, to be served concurrently. His term began May 1. Three years of probation will follow, during which he will be prohibited from opening new lines of credit, without prior approval from the probation office. Vanderzee must also provide requested financial information.
According to Internal Revenue Service investigators, Ostby and Vanderzee formed DC Development of North Carolina LLC to flip houses and convince friends to create similar businesses. Ostby and Vanderzee are accused of using the businesses to acquire credit cards and cash advances from 12 financial institutions.
The total joint restitution ordered by the court for Ostby and Vanderzee to pay back is $520,324.30. The interest requirement was waived by the court.
Date posted: May 24, 2012
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