The owner of a low income housing firm in Chattanooga pleaded guilty on Tuesday to federal fraud charges.
Matthew John Crupi, who raised $5 million for the Urban Investment and Development (UID) firm, appeared before Federal Magistrate Bill Carter.
His plea was to wire fraud.
Prosecutors said the real estate developer promised investors a return of up to 20 percent.
The indictment says after the business began losing money Crupi was faced with continuing payments to investors. It says he began to pay the interest to early investors out of money received from new investors.
It says Crupi induced a South Carolina man, identified only as DD, to come to Chattanooga to look over property the firm allegedly owned and was planning to develop. DD wired $89,000 from South Carolina believing it was to be used to develop the property, it was stated.
Prosecutors said Crupi did not actually own the four pieces of property, but he prepared fraudulent deeds of trust that were shown to the South Carolina investor.