Attorney Sentenced for Distressed Loan Bid-Rigging

Allison Tussey —  March 9, 2011 — Leave a comment

Paul J. Aparo, 61, Hartford, Connecticut, was sentenced by Chief United States District Judge Alvin W. Thompson in Hartford to 24 months of imprisonment, followed by five years of supervised release, for his role in two fraud schemes. Aparo also was ordered to pay a fine in the amount of $20,000.

According to court documents and statements made in court, from approximately October 2001 to February 2007, Aparo, an attorney, conspired with Kevin J. O’Keefe, who was a vice president at Fleet Bank (and Bank of America after it acquired Fleet Bank), Hartford, Connecticut, and Richard R. Girouard, a real estate developer, to enrich themselves through the use of O’Keefe‘s position at the bank. Aparo, O’Keefe, and Girouard corrupted the bidding process on distressed loans that Fleet Bank was selling. As part of the scheme, Aparo, O’Keefe, and Girouard created shell companies through which to submit bids on distressed loans being sold by Fleet Bank and with which to receive and distribute proceeds from the scheme. O’Keefe had access to and obtained confidential information belonging to Fleet Bank and provided that information to Aparo and Girouard so that it could be used to submit winning bids on distressed loans. O’Keefe also intentionally provided outdated information to other bidders involved in the bidding process in order to cause those bidders to submit artificially low bids. O’Keefe provided Aparo and Girouard with access to the most up-to-date information. O’Keefe also excluded bidders who he, Aparo, and Girouard believed would submit competitive bids for a distressed loan on which O’Keefe, Aparo and Girouard sought to bid.

Aparo has acknowledged that Girouard paid him and O’Keefe approximately $100,000 on one loan that Girouard obtained through the corrupt assistance of Aparo and O’Keefe. In addition, Girouard agreed to pay a shell company called Lexington Associates 15 percent of the profits on another distressed loan on which Girouard, with Aparo, and O’Keefe‘s corrupt assistance, had submitted a winning bid. The 15 percent of the profits on the loan that Girouard (through his own shell company) paid to Lexington Associates amounted to more than $1.4 million, which Aparo and O’Keefe essentially split evenly.

Between December 2005 and January 2006, as part of a second scheme, Aparo and O’Keefe defrauded Bank of America and Aparo‘s client out of money. In that scheme, a client contacted Aparo about getting a mortgage release from Bank of America for an old mortgage. Aparo contacted O’Keefe about it, and O’Keefe checked Bank of America‘s internal records for the mortgage. O’Keefe found that no record of the mortgage existed within the bank. However, Aparo and O’Keefe conspired to defraud the client and the bank by telling the client that the bank would release the mortgage for $55,000, which the client paid to Aparo through his law firm’s trust account. Aparo then paid the $55,000 to O’Keefe, and a mortgage release on behalf of Bank of America was provided to the client.

On July 24, 2008, Aparo pleaded guilty to one count of conspiracy to commit financial institution bribery and one count of bank fraud.

On November 24, 2009, Girouard pleaded guilty to one count of conspiracy to commit financial institution bribery. On April 30, 2010, he was sentenced to 30 months of imprisonment and was ordered to pay a fine in the amount of $15,000.

On June 11, 2008, O’Keefe also pleaded guilty to one count of conspiracy to commit financial institution bribery and one count of bank fraud. He awaits sentencing.

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

This case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Eric J. Glover.


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Allison Tussey

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