Leon Gelfgatt, 49, Marblehead, Massachusetts, has been indicted by a statewide Grand Jury for allegedly attempting to retrieve over $1.3 million dollars in mortgage funds in connection with a sophisticated mortgage fraud scheme. Leon Gelfgatt allegedly used false documents to create the appearance that mortgages on several Massachusetts properties which were scheduled for impending sale had been transferred to a fake company created by Gelfgatt. Gelfgatt allegedly did this in order to obtain the payoff funds sent by real estate closing attorneys when the properties were sold.
Gelfgatt, is charged with Forgery (17 counts), Uttering a Forged Instrument (17 counts), and Attempted Larceny (3 counts). Massachusetts State Police assigned to the Attorney General’s Office arrested Gelfgatt on December 17, 2009, as he allegedly attempted to retrieve over $1.3 million dollars in mortgage funds in connection with a sophisticated mortgage fraud scheme. He was arraigned the next day in Cambridge, Massachusettes District Court where he entered a plea of not guilty and was subsequently released on cash bail, set at $30,000. As a condition of his release, Gelfgatt was required to submit to GPS monitoring and to surrender his passport.
As previously reported on Mortgage Fraud Blog, in November, 2009, the Attorney General’s Office began an investigation after the matter was referred by Wainwright Bank & Trust Company. According to authorities, between August and November of 2009, Gelfgatt allegedly identified and targeted fourteen high-end properties which were scheduled for an imminent sale. Gelfgatt then recorded seventeen forged mortgage assignments at the Registries of Deeds in Suffolk, Norfolk, and MiddlesexCounties in Massachusetts. These false mortgage assignments appeared to transfer the mortgage from the correct mortgage company to either Baylor Holdings, Ltd., or Puren Ventures, Inc., which were inactive corporations being offered for sale on the Internet. Gelfgatt created an elaborate system of email addresses, phone numbers, and electronic fax numbers to give the impression that these were functioning and legitimate businesses.
Gelfgatt then waited for attorneys responsible for clearing the title to the properties to reach out to these sham companies to request a “payoff statement”. A payoff statement is a document used by mortgage companies to state the precise amount necessary to pay a mortgage in full. Authorities allege that on two occasions Gelfgatt, in the guise of Baylor Holdings, Ltd., allegedly provided these closing attorneys with false payoff statements. The payoff statements instructed the closing attorneys to overnight the funds required to pay off the mortgages to an office address in Boston, Massachusetts. Gelfgatt was arrested after he attempted to retrieve these payoff funds.
“We allege that Mr. Gelfgatt used his knowledge of the real estate industry to use forged documents in an attempt to divert mortgage payoff proceeds from home sales to himself,” Attorney General Martha Coakley said. “As a result of the efforts of investigators with the Massachusetts State Police and Attorney General’s Office, Mr. Gelfgatt’s alleged scheme was uncovered before he was able to succeed in his plans.”
A statewide Grand Jury returned indictments against Gelfgatton May 4, 2010. He will be arraigned in Middlesex, Suffolk, Norfolk, and Essex County Superior Courts at a later date.
The case is being prosecuted by Division Chief James O’Brien and Assistant Attorneys General Margaret Parks and Andrew Doherty, all of Attorney General Coakley’s Corruption and Fraud Division. The investigation was handled by members of the Massachusetts State Police, as well as members of Attorney General Coakley’s Computer Forensics Lab and investigator James McFadden of the Attorney General’s Financial Investigation Unit. Additional assistance was provided by the United States Postal Inspection Service and security officers associated with Stop & Shop.