Pasquale Scavitti, III, 46, Cranston, Rhode Island, has pled guilty to a single count of wire fraud. Scavitti admitted that between 2003 and August 2008 he unlawfully diverted mortgage funds that were wire transferred into his client office account to his own personal benefit, resulting in losses in excess of $2.5 million.
At the plea hearing, Assistant U.S. Attorney Andrew J. Reich said the government could prove that Mortgage Guarantee and Title Company was a real estate title and closing company. The defendant maintained a law practice in Cranston, Rhode Island, and at various times, shared his office space with other attorneys. The defendant maintained a client escrow bank account as part of his law practice.
According to court documents Mortgage Guarantee maintained a list of Approved Attorneys who could act as its agents. Before the proceeds of a mortgage transaction were sent to the attorney’s escrow account, the lender required a Closing Protection Letter, also known as a “CPL,” from Mortgage Guarantee. The CPL sets forth the identity of the attorney who is to act as the closing attorney on the transaction, and states that the identified attorney is an Approved Attorney of Mortgage Guarantee.
Beginning in 2003, an attorney working in Scavitti’s law office, and the law offices Scavitti, became Approved Attorneys for Mortgage Guarantee. This attorney subsequently acted as the closing agent for Mortgage Guarantee on numerous mortgage refinancings and mortgage loans. In each of these transactions, a CPL letter was sent to the lender. The loan and refinancing proceeds from each transaction were wired transferred into the client escrow account of the defendant.
Between 2003, and August 2008, the defendant directed that funds which were deposited into his client escrow account at closings not be used to pay off the corresponding existing mortgages. Instead, at his direction, these funds were used to pay for various personal expenses of the defendant, and also used to pay for law office expenses, above and beyond the fees to which his office was entitled to as the closing attorney. Escrow funds were also used to pay off existing mortgages that were already delinquent, since they were originally not paid off in a timely fashion.
In September, 2007, Mortgage Guarantee terminated the authority of the law offices of the defendant and the attorneys in that office from acting as Approved Attorneys for Mortgage Guarantee.
After the defendant’s law office was terminated as an Approved Attorney for Mortgage Guarantee, the defendant contacted other attorneys to act as the title attorney on real estate transactions and closings. On these transactions, the defendant sent fraudulent CPL letters to the lenders, in that these letters incorrectly and falsely identified Scavitti‘s law office as the Approved Attorney for Mortgage Guarantee. On each transaction where these fraudulent CPL letters were sent, the lender, in reliance upon the CPL letter, sent the loan proceeds to Scavitti‘s client escrow account. As he did before, the defendant continued to direct that funds which were deposited into his client escrow account at closings not be used to pay off the corresponding existing mortgages. Instead, at his direction, these funds were used to pay for various personal expenses of the defendant, and also used to pay for law office expenses.
In August, 2008, it was determined that as a result of the fraudulent scheme, thirteen (13) mortgage loans and/or refinancings had not been paid off by the defendant, resulting in total losses of approximately $2,539,551.
United States Attorney Robert Clark Corrente announced the guilty plea, which Scavitti entered the plea before Chief Judge Mary M. Lisi in U.S. District Court, Providence.
The defendant was released on an unsecured bond of $50,000. He is scheduled to be sentenced on September 24, 2009. The maximum prison sentence is 30 years imprisonment and a fine of $1 million.
The Federal Bureau of Investigation conducted the investigation.