Douglas Sheehan, 39, Meriden, Connecticut, was sentenced to six months of imprisonment, followed by three years of supervised release, for his role in a Hartford, Connecticut area mortgage fraud scheme. Sheehan was also ordered to serve the first six months of his supervised release in home confinement, and to perform 200 hours of community service.
According to court documents, statements made in court and as previously reported on Mortgage Fraud Blog, between September 2003 and November 2007, Sheehan, an attorney, conspired with George Hajati, who owned Connecticut Partners Mortgage (“CPM”), Justin Williams, a CPM employee, and others, to deceive mortgage lending financial institutions into providing falsely inflated mortgage loans to real estate buyers for the purchase of property that was worth less than the amount of the loans. CPM provided fraudulent financial statements to the lending institutions that inflated the sales prices of the properties, the down payments made by purchasers and the amount due to sellers, as well as other fraudulent information, in order to induce the institutions to provide the funds.
Sheehan, at the request of Hajati and Williams, falsified real estate settlement statements, referred to the U.S. Department of Housing and Urban Development Uniform Settlement Statements (“HUD-1s”), in order to disguise the actual amount of loan proceeds that were being paid by the buyer, as well as the actual disbursement of the loan proceeds. A HUD-1 in an official financial statement reflecting how money is to be distributed at closing. As part of the scheme, two HUD-1s were generated for closing. The falsified HUD-1 statements were sent to various lending institutions. A second HUD-1, which reflected a loan amount less than what had been disclosed to the lender, was then used to distribute the money at closing. Sheehan controlled the escrow account that received the funds from the lenders.
Hajati and Williams kept the extra cash that was provided by the lenders. Sheehan was paid a standard attorney’s closing fee for each closing he handled.
The various lenders have suffered a loss of more than $1 million as a result of this mortgage fraud scheme. Between $200,000 and $400,000 in losses can be attributed to Sheehan‘s role in the conspiracy.
On November 20, 2008, Sheehan pleaded guilty to one count of conspiracy to commit wire fraud and three counts of wire fraud. Sheehan has been disbarred.
On April 5, 2010, Hajati pleaded guilty to one count of conspiracy to commit wire fraud and eight counts of wire fraud stemming from the scheme. On October 21, 2009, Williams pleaded guilty to one count of conspiracy to commit wire fraud and three counts of wire fraud. Each awaits sentencing.
This case is being investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Paul H. McConnell.