Financial woes facing figure after FBI search
Hamburg homes’ buyer targeted for foreclosure
Michael Wilson, the 22-year-old businessman whose company shelled out $2 million and agreed to pay an additional $4.3 million for two Hamburg mansions last year, appears to be having money problems. Which is in addition to the search of the houses by FBI agents Wednesday.
Wilson, formerly of Cleveland, was required to pay the mortgage-holder $1 million May 1 for the two houses but failed to do so, according to court papers filed by attorney Bruce S. Zeftel.
“[Wilson] still hasn’t come up with the money,” said Zeftel, attorney for John A. Russo, who sold Wilson the homes and also holds the mortgages on them. “We filed a foreclosure action on June 16 and are moving forward to foreclose on both properties.”
Wilson’s company bought the two homes at 6553 and 6523 Boston State Road last year for a total of $6.3 million.
“I want to emphasize that this situation with the mortgages has no connection to the FBI investigation,” Zeftel said.
The FBI investigation includes agents who executed search warrants at the homes Wednesday, seizing computers, documents, three vehicles and three guns in connection with an investment fraud investigation.
Is it another case of a businessman who seems to have big money and big ideas letting Buffalo down?
Or is Wilson being wrongly blamed by investors who lost money?
A few details about the federal investigation began to emerge:
• Wilson is a top executive with investment companies called New Frontier Trust and New Frontier Holdings, which are under investigation for alleged investment fraud, law enforcement officials said.
• The investment companies cater to a small number of wealthy clients and, according to New Frontier Trust’s Web site, the only way someone can become a client is with a referral from another client.
• A businessman from Texas told The Buffalo News that he believes that $600,000 he sent to one of Wilson’s companies last year was illegally put toward the purchases of the two Hamburg homes.
“The money was supposed to go to the New Frontier Trust and then be invested in bank instruments,” said the businessman, Scott Albert of Dallas. “But the investors have found that it actually was used toward the purchases of those homes.”
Albert said that he and other investors have been conducting their own investigation in recent months and that they have learned that Wilson’s companies have allegedly cheated investors out of at least $30 million.
Buffalo FBI spokesman Earl P. Gould and acting U. S. Attorney Kathleen M. Mehltretter declined to comment in specifics on those allegations.
“We’re taking a look and tracking the money that investors sent, to see what happened to it,” Mehltretter said, adding that the case could take a long time to untangle.
Wilson could not be reached to comment. His attorneys, Paul J. Cambria and Robert L. Boreanaz, said he denies any wrongdoing.
“He absolutely denies any wrongdoing, and he said so to the FBI agents who were at his house,” Cambria said. “A lot of people who are investors go into it thinking they’re going to make millions, and when they don’t, they blame the person who invested it for them. . . . Investing is risky.”
How did Wilson become wealthy so quickly that he could afford to spend $6.3 million on homes at age 21?
Wilson was raised in a middle-class family, and “not with a silver spoon in his mouth,” Boreanaz said. “He started getting into the stock market when it was on fire.
“He’s gotten to where he is by being very smart and taking risks that other people are jealous of him for taking. His clients are very wealthy people from throughout the country who are interested in high-risk, high-return investments.”
But according to court documents, Wilson — for whatever reason — has not been paying the mortgages for his two luxury homes in Hamburg.
He bought the homes through another of his companies, Phantom Holdings One, last October in two transactions totaling $6.3 million. Russo, the son of the founder of the Sorrento Cheese company, sold the homes.
Wilson put up $1 million cash for each of the homes “and then was required to pay another $1 million every six months,” Zeftel said. “He was required to pay $1 million to Mr. Russo on May 1 and, so far, has not paid it. That’s why we’ve filed to foreclose on the homes.”
The homes could be auctioned off, or could wind up back in Russo’s possession, if Wilson doesn’t make good on his required payments in the next couple of months, Zeftel said.
Albert said he and other investors have learned that investors’ money was illegally used by Wilson to pay for the two mansions. He alleged that several of Wilson’s New Frontier business associates were also involved in those transactions.
“I want this [FBI] investigation to bring these guys down. They’re junior Madoffs,” Albert said in a telephone interview.
Both Cambria and Boreanaz said they have no knowledge of Wilson’s mortgage arrangements and could not comment on the foreclosure effort.
Local real estate officials said the purchase prices of the two homes—$3 million for one and $3.3 million for the other— were the most expensive home purchases ever recorded in Erie or Niagara counties.
News Staff Reporter Jay Rey contributed to this report. dherbeck@buffnews.com
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