Annapolis mortgage broker charged with fraud 

Posted: 6:32 pm Tue, February 2, 2010
By Ben Mook
Daily Record Asst. Business Editor

The Securities and Exchange Commission and the FBI have charged an Annapolis mortgage broker with fraudulently using investors’ money to day trade on stocks, bankroll his other companies and pay for a vacation to the British Virgin Islands.

The FBI and the SEC claim David Wehrs Sr., 54, owner of Maryland Title and Escrow Co. Inc., defrauded individual investors and financial institutions out of about $2.3 million from 2007 to October 2009. Prosecutors claim much of that money was used by Wehrs to day trade, which involves the rapid buying and selling of stocks. They also claim Wehrs had “millions of dollars of stock trades per month.” According to court documents, Wehrs lost around $1 million in those trades from early 2008 until mid-2009.

To fund the day trading, prosecutors claim Wehrs raised $1.96 million from a group of 13 investors, telling them he was running an FDIC-insured money market fund. He reportedly guaranteed investors a 10.85 percent return on the investment. The group included a homeowners association, retirees and even a woman who gave him savings she was using for family purposes.

“Wehrs convinced one woman to invest more than $130,000 knowing the money was earmarked for the care of her disabled cousin,” the complaint reads.

In addition to day trading, prosecutors claim Wehrs steered investor money into Show-Me, his home improvement company. He is also alleged to have used investor money to make escrow payments for his title company, buy real estate and pay for vacations and trips to the British Virgin Islands.

When the investor money ran out, prosecutors say Wehrs used $630,611 earmarked for lending institutions for mortgage payments that he had in his escrow account under Maryland Title. He is also alleged to have used $100,000 from the Maryland Title escrow account that had been put there to purchase a home for a customer. Federal prosecutors say they believe Wehrs lost a total of $2.37 million over the course of the scheme.

Phone numbers for Wehrs and for Maryland Title have been disconnected. Wehrs faces a maximum sentence of 20 years in prison; no court appearance has yet been scheduled.

In addition to the fraud charges, the SEC is seeking a permanent injunction against Wehrs and his company as well as penalties and repayment. The cases were filed in the U.S. District Court for the District of Maryland on Monday.