Bank Employee Admits Role in $6M Fraud Scam

Allison Tussey —  January 24, 2011 — Leave a comment

Susan A. Curtis, 49, Naugatuck, Connecticut, pled guilty to bank fraud and tax charges stemming from Curtis involvement in a scheme to defraud Webster Bank and Bank of America of more than $6 million.

According to court documents and statements made in court, Curtis was employed in the Property Services Division of Webster Bank with responsibilities that included negotiating and managing bank property leases where Webster Bank was a landlord or tenant. Curtis and Kevin W. Caffrey, who were married from May 2000 to May 2006, established a company called New House, LLC. Later, Curtis and a co-defendant established a company called Equity Realty, LLC. Curtis falsely represented to Webster Bank’s Vendor Management Department that both companies were brokers, an exempted category for due diligence and annual review.

As part of a scheme to defraud Webster Bank, Curtis submitted paperwork to Webster Bank’s Accounts Payable Department in which she falsely represented that New House and Equity Realty were due fees in approximately 108 real estate related transactions. As a result, Webster Bank made payments of approximately $5.04 million to New House and Equity Realty.

In addition, Curtis caused persons doing business with Webster Bank to send approximately $723,620 in payments for tenant improvements and reimbursements, which were owed to Webster Bank, directly to Curtis. Certain of these checks were altered to make them payable to Webster Bank c/o Equity Realty, and then were deposited into an Equity Realty account at another bank.

Curtis also caused a representative of Webster Bank to send another $450,000 payment, which was owed to Webster Bank, directly to Curtis. The check was made payable to Equity Realty c/o Webster Bank, and was subsequently deposited into the Equity Realty bank account.

In pleading guilty, Curtis also admitted that she fraudulently applied for, and received, a $649,000 mortgage loan from Bank of America for a property in East Hampton, Connecticut. Curtis submitted false loan applications on which she misrepresented and concealed the real source of her income and extent of her liabilities.

Finally, Curtis admitted that she filed false federal tax returns for the 2006 through 2009 tax years, during which she failed to report more than $3.79 million in embezzled funds.

On November 10, 2010, a federal grand jury in Hartford, Connecticut returned a second superseding indictment charging Curtis and a co-defendant with various offenses stemming from this embezzlement scheme. Curtis plead to six of the eight counts in which she is charged, namely two counts of bank fraud and four counts of filing false tax returns. She has plead not guilty to one count of conspiracy to money launder and one count of bank fraud, and a trial on the remaining counts in the indictment is scheduled for April 18, 2011.

Each count of bank fraud carries a maximum term of imprisonment of 30 years, and each count of filing a false tax return carries a maximum term of imprisonment of three years. Curtis also faces a maximum fine of more than $12 million. She also will be ordered to pay restitution to the victim banks, and back taxes, plus penalties and interest, to the Internal Revenue Service.

In addition, the government is seeking the forfeiture of an interest up to an amount of $1,105,790.79 in real property in East Hampton, Connecticut several automobiles, two Harley Davidson motorcycles, two boats and boat trailers, approximately $300,000 in artwork, approximately $100,000 in jewelry, and a Steinway piano valued at more than $77,000. The government also is seeking a money judgment in the amount of $7,002,589.85.

David B. Fein, United States Attorney for the District of Connecticut made the announcement and stressed that, for Curtis and her co-defendant, an indictment is only a charge and is not evidence of guilt. The defendants are entitled to a fair trial at which it will be the government’s burden to prove guilt beyond a reasonable doubt.

On October 14, 2010, Kevin Caffrey plead guilty to one count of bank fraud and one count of filing a false tax return. He awaits sentencing.

This matter is being investigated by the Federal Bureau of Investigation and the Internal Revenue Service – Criminal Investigation. The case is being prosecuted by Assistant United States Attorneys Michael S. McGarry and Paul A. Murphy.


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Allison Tussey

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