Broker Sentenced to Nearly 23 Years for Defrauding Vulnerable Homeowners

Allison Tussey —  May 3, 2010 — 2 Comments

Michael Fiorito, 41, Prior Lake, Minnesota, was sentenced by United States District Court Judge Patrick J. Schiltz on charges connected to an equity-skimming scheme that targeted vulnerable homeowners. Fiorito was sentenced to 270 months in prison on one count of conspiracy to commit mail fraud and six counts of mail fraud. Fiorito was indicted on June 19, 2007, and was convicted by a federal jury on May 20, 2009, following a three-week trial.

At sentencing, Judge Schiltz described Fiorito as a “troubled and dishonest” individual who is “incapable of empathizing” with his victims and who “refuses to accept responsibility” for his actions. Judge Schiltz went on to impose a prison sentence greater than called for under the U.S. Sentencing Guidelines. In doing so, he said, “Never before have I varied an upward sentence, but in this case, I find it justified because of the need to protect the public. I have no doubt that upon his release from prison, Mr. Fiorito will return to victimize others, and the sole way to limit that is to keep him locked up. He’s spent most of his life lying and stealing, and I do
not believe it’s possible to deter him.”

According to court documents and evidence presented at trial, Fiorito was a mortgage broker at three different Minnesota mortgage companies between 2004 and 2007. During that time, he worked with his assistant, Kristin Louise Jerde, to devise a scheme to defraud homeowners who were in foreclosure or behind on their mortgage payments. Specifically, Fiorito and Jerde caused those homeowners to refinance their home loans or sell their homes outright to Fiorito. Then, he stole their money, either taking the equity checks produced during the refinancing process or the closing checks intended for the sellers of the homes he supposedly purchased.

In some instances, Fiorito stole checks meant for others simply by intercepting them. In other instances, he acquired the money by intimidating victims into endorsing the checks over to him. In most cases, however, he caused his victims to execute documents granting him power of attorney. With those executed documents, he could easily deposit money belonging to others into accounts over which he had exclusive control.

During trial, witnesses testified that they were unaware they had signed documents granting Fiorito permission to handle their money. In addition, they often times failed to realize they had actually sold their homes to Fiorito. According to them, Fiorito routinely misrepresented the papers he gave them for signature, which led them, unknowingly, to award Fiorito power over their money and title to their property. Court documents also indicate that under certain circumstances, even after Fiorito had fraudulently acquired title to the homes of these unsuspecting people, he sent them monthly “mortgage” bills.

Much of the fraudulent documentation that Fiorito supplied to and obtained from his victims was sent through the U.S. mail, prompting the charges filed against him in this case.

Between January 2005 and March 2007, Fiorito fraudulently converted to his own use almost $500,000 in equity as a result of his illegal activity. His victims included 17 people from Janesville, Mound, Duluth, Mankato, Prior Lake, Spring Lake Park, Austin, Golden Valley, Vadnais Heights, and Shoreview, Minnesota.

In connection to this crime, Fiorito‘s assistant, Kristin Louise Jerde, pleaded guilty to one count of conspiracy to commit mail fraud. On September 9, 2009, she was sentenced to serve three years of probation and ordered to pay $364,092.24 in restitution.

This case was the result of an investigation by the U.S. Postal Inspection Service and the Minnesota Financial Crimes Task Force. It was prosecuted by Assistant U.S. Attorney David J. MacLaughlin.

Following sentencing, United States Attorney B. Todd Jones, who announced the sentencing, said, “The Department of Justice is committed to investigating and prosecuting all types of financial fraud. This fraud is particularly cruel because the victims were already struggling during a time of financial turmoil. Fiorito represented himself as someone who could help them, and, instead, he caused them even more suffering and hardship.”

Following the sentencing, Shawn S. Tiller, Inspector in Charge of the Denver Division of the U.S. Postal Inspection Service, which covers the Twin Cities said, “The sentence handed down today should send a message to would-be criminals who are considering using the U.S. mail to perpetrate their fraudulent schemes. The U.S. mail is still one of the most trusted means of communication in this country, and the United States Postal Inspection Service will continue to uphold that public trust and ensure that individuals using the mails to commit fraud are brought to justice.”

Be Sociable, Share!

Allison Tussey

Posts Google+

2 responses to Broker Sentenced to Nearly 23 Years for Defrauding Vulnerable Homeowners

  1. I’m a loan officer. This guy tried in 2002 to fraudulently obtain a home loan from me. I busted him, and he was denied the loan.

    He couldn’t produce any of the the normal documents needed (pay stubs, w2’s, etc), and then threatened physical violence when we did some verifications (bank, job) and found out everything was made up. I still remember him saying “who authorized you to request verifications?” Ahhh.. You did when you signed the Verification Authorizations.

    Against my better judgement, we then did a loan in just his wifes name. Afterwards he compained (lied) to the Commerce Department who started an investigation ON ME saying I did bait-n-switch against them. He said I promised him a great 30-yr fixed, but switch to a sub-prime loan with a higher rate. Of course I didn’t do anything wrong, and I was cleared in the end, but had to go through the hassle. Jerk…

    He apparently went into the mortgage business right afterwards and started scamming people immediately.

    It’s funny what the judge says…

    This guy was a scam artist WELL BEFORE he got into the mortgage business, and I have documentable proof he tried fraudulently tried getting a loan from me.

    It just burns me guy’s like this were able to get into the business. Luckily the rules have changed. He couldn’t get into the business today.

  2. THIS GUY GOT WHAT HE DESERVED THAT JUDGE HIT IT ON THE MARK.THERE IS A PERSON HERE AT PINE VILLAGE NORTH TOWNHOMES WHO HAD 200 PLUS T/H S FORECLOSED ON AND MORE TO COME.THIS PERUVAN WONDER AND HIS SON MADE PEOPLE THINK THEY WERE BUYING ON CONTRACT FOR DEED WHEN THEY DID NOT HAVE TITLE TO THE PROPERTY.DONT TELL THE FBI THEY ARE TOO BUSY LIFTING MANHOLE COVERS LOOKING FOR BENLADEN.YEARS AGO THEY TRANSFERRED THE DEAD BEATS TO MONTANA BUT NOW NOME AK WOULD BE JUST RIGHT.

Leave a Reply

Text formatting is available via select HTML.

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong> 

*