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Hotel Lorraine manager, co-defendant ordered to pay $3.9M, sentenced to 90 months for real estate fraud scheme and defrauding government

Ronald Wilson and 2 others pleaded guilty to several charges. The downtown hotel closed in October, abruptly displacing dozens of low-income tenants.

TOLEDO, Ohio — U.S. Attorney Justin Herdman announced today that former manager of the Hotel Lorraine, Ronald Wilson, 47, of Vickery, was sentenced by Judge Jack Zouhary to 90 months imprisonment and ordered to pay $3,977,919.39 in restitution with co-defendant Sherri Wilson after pleading guilty to conspiracy to commit wire fraud, three counts of wire fraud, mail fraud, bank fraud, and embezzlement of government property on Feb. 11.

Ronald Wilson was the manager of the former Hotel Lorraine in Toledo, which was shut down in October 2019, forcing dozens of tenants, many of whom were of low income, to vacate before the building was boarded up. The hotel at 1117 Jefferson Ave. was ordered to shut down because of financial issues and poor living conditions. 

Additionally sentenced in this matter were Sherri Wilson, 31, of Vickery, and Murphy Feeny, 32, of Toledo. Sherri Wilson was sentenced to 45 months imprisonment after pleading guilty to conspiracy to commit wire fraud, three counts of wire fraud, mail fraud, bank fraud, and embezzlement of government property. Murphy Feeny was placed on probation for a term of three years after pleading guilty to one count of conspiracy to commit wire fraud and ordered to pay $32,000 in restitution. 

   

According to court documents, beginning in 2016, Defendants Ronald and Sherri Wilson developed a scheme to recruit investors from around the world who sought to invest in Toledo’s residential real estate market. 

These investors were told by Ronald and Sherri Wilson that, if they sent the Wilsons money, the Wilsons would purchase properties for the investor, register a limited liability company purportedly controlled by the investor, rehabilitate the properties, obtain tenants, and manage rental income on the investors’ behalf.

The original indictment from July 10, 2019 says that their company, Sierra Real Estate Services, made its base of operations in the Hotel Lorraine.

RELATED: FBI presence at Hotel Lorraine

In actuality, the Wilsons routinely gave themselves control over the subject LLCs, misdirected investor funds, withheld income, took payment for rehabilitation projects, but never completed ordered work, defrauded an insurance company, engaged in “check-kiting,” and even embezzled United States Department of Housing and Urban Development funds meant to benefit low-income tenants in the City of Toledo, according to the U.S. Attorney's Office for the Northern District of Ohio. 

Many of the properties involved in this case, including the downtown hotel, have been left derelict and uninhabitable. Tenants of the now-uninhabitable properties - including vulnerable Section 8 recipients - have been displaced as a result of the defendants’ actions.

THE CRIMES

In sum, Ronald and Sherri Wilson caused millions of dollars in losses to investors, as described in court filings.

Using various means, the defendants identified potential victims, nearly all of whom lived outside the northwest Ohio area. Some of the victims were from Maryland, Kansas and the United Arab Emirates, court documents show. 

These defendants encouraged victims to contract with Sierra Real Estate to purchase and renovate residential rental properties in the Toledo area. In addition to owning the properties, the victims would also purportedly receive rental income while the defendants managed the properties.

The fraudulent real estate investment scheme also involved making false statements to an insurance company, as was the case with statements made regarding the circumstances of a fire that destroyed a rental property on East Bancroft Street in Toledo. Court records show the insurance company was told the fire was caused by a fuel can stored next to a generator.

Defendants also falsely told investors their properties were insured under a nonexistent policy held by Sierra Real Estate and also deceived them by telling them the properties were occupied by renters and in good repair, when in fact the properties were merely staged to appear so.

The scheme also involved an LLC they formed called NDAN Ventures, which was used to defraud First Mercury Insurance Company.

Bank fraud involved accounts at Fifth Third Bank and KeyBank.

When it comes to the fraud perpetrated against the U.S. government through the Section 8 Housing Choice Voucher Program, administered by the Lucas Metropolitan Housing Authority, the defendants used an LLC called Holy Bell Estates, which had control over the Holy Bell Estates properties. Sierra Real Estate was the registered agent for Holy Bell Estates and Holy Bell Estates entered into an agreement with Ronald Wilson to manage numerous properties around the Toledo area. Ronald Wilson executed a power of attorney in 2017, unbeknownst to members of Holy Bell Estates, to give Sierra Real Estate effective control over the properties.

Shortly after that, Sherri Wilson filed a request for change of ownership with LMHA for a property owned by Holy Bell Estates on Lawrence Avenue in Toledo, which then directed money from the Section 8 vouchers into Sierra Real Estate's coffers. This action was repeated with properties on Glenwood Avenue in Toledo. The Wilsons received about $11,000 in Housing Choice Voucher Program money by doing this.

THE HOTEL

Charles Allen is a community organizer that helped find homes for the 38 tenants of the Hotel Lorraine after it was shut down with short notice.

RELATED: Hotel Lorraine residents have days to find new housing

The hotel was known for its walkable location and lower rent for the area, so many people on fixed incomes without homes would pay to stay month-to-month.

"Cockroaches, bedbugs, mice." 

That's how former Hotel Lorraine resident Todd Yuergens explained the living conditions.

Restitution is expected to be paid back to investors, but Allen wants to see something done for tenants, many of whom were able to find temporary emergency housing, carrying trash bags filled with their belongings to their new residence.

Yet, ten months later, some are still struggling to find permanent homes.

"The lack of affordable housing, this had become home. This was more than a hotel for a lot of them," Allen said.

Allen says he won't forget the mass displacement, remembering a hotel resident who died during the moving process. 

The tenant's mother, also a resident, had to pick up and move without him while dealing with her grief.

"I think what we need is accountability, definitely accountability for people buying property sight-unseen in our community. Accountability for slumlords," Allen said.

Allen is hopeful people who invested in the Wilsons' company choose to use some restitution they receive to bring affordable housing options to Toledo.

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