Lizette Morice, a 42-year-old businesswoman from Ewing Township, New Jersey, has been sentenced by a court in Philadelphia to ten years in prison for recruiting almost 2,800 people to invest money in her fictitious business of buying and selling repo homes.
Morice's victims thought they had found a gold mine in repo homes because the investors who invested first in Morice's enterprise got their money back and more.
As the early investors received between $50,000 and $250,000 as profits for their $1,000 initial investments, word got around, prompting many people to invest their money in Morice's Philadelphia-based firm called Gaddel Enterprises. In only 15 months, Morice was able to collect $7.8 million from people who thought they were investing in repo homes.
While being sentenced in court, Morice sobbed and reiterated that her business plans involving repo homes were viable and that her motives were good. But District Judge Berle Schiller quickly waved her off.
Assistant U.S. Attorney Frank Costello said the strategy of paying the first investors is typical of financial scams. He said the scheme of paying the first investors with big amounts is a very powerful way to entice more investors.
There were several investors who testified in court against Morice. One of them said his life is destroyed because he has persuaded a lot of Hurricane Katrina survivors to invest their relief money from the federal government.
The judge ordered Morice to give back almost $7.3 million to the victims. But the money is almost gone. The judge also added he is considering a request to examine the possibility of making the early investors who received large payouts to repay the victims.
Public attorney Cathy Henry contended that Lizette Morice did not profit significantly from the enterprise. She explained that Morice spent $5.5 million to reward investors; $1.5 million to pay salaries and operating costs; $150,000 to finance two company parties and the rest to pay living costs for her and her two children.
Morice's company operated offices in Morrisville and in Langhorne. The investigation began after two of her employees reported her to authorities when they saw Morice was not buying repo homes despite conducting regular meetings.
Morice is set to enter federal prison on June 5.
In April, Treasury Secretary Timothy Geithner held a press conference to announce a national effort to protect distressed homeowners from getting victimized by scams related to repo homes.
