Attorney Sent to Prison for Mishandling Mortgage Funds

Allison Tussey —  October 12, 2011 — Leave a comment

Brian P. McManus, 43, Fairfield, Connecticut, was sentenced by Senior United States District Judge Ellen Bree Burns in New Haven, Connecticut,  to 21 months of imprisonment, followed by three years of supervised release, for misappropriating more than $1 million in funds during real estate transactions he handled.

According to court documents and statements made in court, McManus, who operated a law practice in New Haven, engaged in a series of fraudulent transactions in his capacity as the closing attorney on a number of real estate transactions.  Specifically, McManus failed to pay off existing mortgages on the properties involved in the real estate transactions in a timely fashion and illegally used mortgage funds that had been deposited into his IOLTA account for other purposes.

On July 22, 2008, McManus handled a real estate closing involving the refinancing of a residential property located in Greenwich.  At the time of the closing, there was an outstanding mortgage on the property in the amount of approximately $2 million that was to be paid off using funds being provided by a different lender as part of the refinancing transaction.  However, rather than paying off the existing mortgage on the Greenwich property, McManus used more than $1.45 million of the new mortgage monies that had been transferred to his IOLTA account to pay off outstanding mortgages from prior, unrelated real estate transactions he had handled, to make monthly payments on the outstanding Greenwich mortgage loan that was to have been paid off in full, and to pay personal and business expenses.

On June 24, 2011, McManus waived his right to indictment and pleaded guilty to one count of bank fraud.

Judge Burns ordered McManus to pay restitution in the amount of $2,041,417.41, of which approximately $568,000 has previously been deposited with the clerk of the court.

David B. Fein, United States Attorney for the District of Connecticut, announced the sentence.

U.S. Attorney Fein noted that McManus has withdrawn from the practice of law and the Connecticut Superior Court has appointed a trustee to oversee the closing of his practice.

This matter was investigated by the Federal Bureau of Investigation and was prosecuted by Assistant United States Attorney John H. Durham.

In July 2009, the U.S. Attorney’s Office and the Federal Bureau of Investigation announced the formation of the Connecticut Mortgage Fraud Task Force to investigate and prosecute mortgage fraud cases and related financial crimes occurring in Connecticut.  Citizens are encouraged to report any suspected mortgage fraud activity by calling 203-333-3512 and requesting the Connecticut Mortgage Fraud Task Force, or by sending an email to

The Connecticut Mortgage Fraud Task Force includes representatives from the U.S. Attorney’s Office; Federal Bureau of Investigation; Internal Revenue Service ““ Criminal Investigation; U.S. Postal Inspection Service; U.S. Department of Housing and Urban Development, Office of Inspector General; Federal Deposit Insurance Corporation, Office of Inspector General, and State of Connecticut Department of Banking.

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Allison Tussey

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