Exclusive: Confessions of a Mortgage Scammer

May 9, 2009— -- Peter Dawson was a mini-Bernie Madoff -- on the surface, a charming family man with a big house, on the make in working class neighborhoods of Long Island, N.Y. Now, he has been sentenced to state prison for at least five years for running an elaborate mortgage scam.

Dawson admitted he ran a Ponzi scheme: He convinced his clients to take equity out of their homes and invest it in his hedge fund. But that "hedge fund" didn't actually exist, he said, and he pocketed the money. When he had to, he paid off old investors with new investors' money.

During the housing boom, Dawson took advantage of desperate homeowners, eager-to-lend banks and lax regulations to steal millions.

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"You just get as much money as possible out of the house," he said in a videotaped deposition obtained exclusively by ABC News. "Whatever you can I guess justify, get approved."

Like Madoff, his victims described him as smart and affable, and he was well-known in his community. Many of Dawson's more than 50 victims came from his lifelong congregation.

"Being active in the church, people came to me," Dawson said.

When Mark Arocho, a Long Island electrician and married father of four, met Dawson in 2004, he was bedridden with lupus and way behind on his mortgage and other bills, Arocho told ABC News.

But in those days of easy lending, Dawson helped Arocho refinance his four bedroom bungalow and take out a $100,000 home equity loan from soon-to-collapse Countrywide Home Loans.

"He had come to us, making false promises and making me believe that he actually cared," Arocho said, "when in fact all he cared about was getting his hands in my bank account." He was a "wolf in sheep's clothing."

Dawson not only stole the equity loan, but he left Arocho with a subprime mortgage that carried a huge adjustable interest rate now nearing 10 percent.

Arocho said everyone, including Countrywide, should have known that he could not afford this mortgage.

"The documentation I provided, the statements that I made, all revolved around the fact that I can't afford what I have now," Arocho said.

Arocho now faces imminent foreclosure and an uncertain financial future.