3 Indicted for Multi-Property Mortgage Fraud Scam

Allison Tussey —  September 22, 2010 — Leave a comment

Michael David Scott, 44, Mansfield, Massachusetts, a real estate developer, Jerrold Fowler, 26, and Thursa Raetz, 35, both of Norfolk, Virginia, two out-of-state recruiters, were charged on a superseding indictment in federal court with multiple counts of wire fraud and bank fraud in connection with a multi-year, multi-property mortgage fraud scheme in Boston, Massachusetts. The developer was also charged with 22 counts of money laundering.

The defendants were charged by a federal grand jury in a superseding indictment. Scott was originally indicted on August 26, 2010. The superseding indictment names Fowler and Raetz as co-defendants and alleges additional fraudulent loans.

The superseding indictment alleges that from September 2006, to April 2008, Scott, Fowler, and Raetz committed fraud in connection with the purported sale of condominium units in Roxbury and Dorchester, Massachusetts. According to the charges, Scott arranged to purchase multi-family dwellings and then sold individual units in the buildings to straw buyers recruited by Scott, Fowler and Raetz. Scott, Fowler and Raetz allegedly promised straw buyers that they would not have to make down payments, pay any funds at the closing, or be responsible for mortgage payments, but would share in profits when the units were resold. The straw buyers’ financing for the purchases was obtained by submitting mortgage loan applications that falsely represented key information, such as the buyers’ income, assets, down payment, and intention to reside in the condominiums. In most instances the lenders (nine mortgage companies and one bank) were led to believe that the straw buyers had made substantial down payments and paid substantial sums at closings.

Each count of bank fraud carries a sentence of up to 30 years in prison, followed by five years of supervised release and a fine of $1 million; each wire fraud count carries a sentence of imprisonment up to 20 years, followed by three years of supervised release and a $250,000 fine; the money laundering counts each carry a maximum punishment of 10 years in prison, followed by three years of supervised release and a fine of $250,000.

United States Attorney Carmen M. Ortiz; Richard DesLauriers, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; and William P. Offord, Special Agent in Charge of Internal Revenue Service Criminal Investigation – Boston Field Division, announced the charges.

“Today’s superseding indictment is the result of our ongoing efforts to prosecute those who engage in mortgage fraud for profit,” said U.S. Attorney Carmen Ortiz. “Large scale frauds overinflate property prices which often resulting in foreclosure, ultimately causing irreparable damage and blight in our local communities.”

The case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service. It is being prosecuted by Assistant U.S. Attorneys Victor A. Wild and Ryan M. DiSantis of Ortiz’s Economic Crimes Unit.

The details contained in the Indictment are allegations. The defendants are presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

Mortgage fraud is a key focus of the Department of Justice. The Department of Justice alongside its federal, state, and local partners is committed to investigating and prosecuting significant financial crimes. The Department is committed to combating discrimination and fraud in the lending and financial markets, and recovering proceeds for victims of financial crimes.

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Allison Tussey

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