Monday, October 10, 2005

Plea Entered in Massachusetts Mortgage Fraud

Changasie Admits Guilt in Flipping Scheme

Wilfred Changasie, 50, a native of Guyana and former resident of Springfield, Massachusetts, plead guilty to two counts of wire fraud and one count of conspiracy to commit money-laundering in connection with his role in an alleged mortgage fraud scheme that involved more than 100 homes in Springfield, Massachusetts.  Changasie was named last year, along with nine other people, in a 69 count federal indictment in connection with an alleged mortgage fraud scheme that spanned seven years and involved inflated appraisals, false mortgage applications and flip sales. Three additional defendants, Lawrence V. Lynch, Edgar Corona and Kathryn Zepka, were recently charged.

Under the plea agreement, Changasie faces a maximum of 30 years in prison and a one million dollar fine on each count of wire fraud and a maximum of 10 years in prison and a $250,000 fine on the conspiracy charge. In the plea agreement, for purposes of sentencing, the amount of fraudulent loans procured was set at between 2.5 and 7 million dollars.

The Republican reports that a prosecutor said Changasie was a “runner” who identified inner city properties and recruited prospective buyers for real estate brokers who duped buyers into purchasing run-down homes for inflated prices, Changasie invested in homes and once gave a mortgage broker a used Jaguar worth $10,000 to push a phony loan application through, according to Assistant U.S. Attorney William M. Welch II and that Changasie later learned the going rate for paying off mortgage brokers was only around $1,000.

The other defendants indicted along with Changasie were Albert V. Innarelli, Michael Bergdoll, Anthony Matos, Pasquale Romeo, James E. Smith, Theodore C. Jarrett Jr., Mark L. McCarthy, Joseph Sullivan and Jonathan Frederick.

Changasie is scheduled for sentencing January 19, 2006.

The indictment alleges that Bergdoll, Romeo, Matos and others purchased distressed properties, typically in low-income neighborhoods, at resolve the properties rapidly at artificially inflated values. They utilized ‘runners’ to recruit prospective buyers and paid finder’s fees to the runners of approximately $2000 for the successful sale of properties.  The defendants represented to buyers that the buyers would not have to make down payments and that money would be kicked back at the time of closing. They also represented that certain repairs would be made to the properties before closing. 

Bergdoll, Romeo, Matos and others, who had established business relationships with Jarrett, Smith, McCarthy, Lynch, Zepka and other mortgage brokers, referred many of the buyers to them for loans.  As many of the borrowers were not qualified, the defendants generated and processed false and fraudulent loan applications and documentation through lending institutions. False documentation reflected that buyers made down payments that were not actually made, reflected inflated borrower income and showed improvements that were not actually made to the properties. The defendants also generated bogus second mortgages to assist in securing loans and created fraudulent inflated appraisals.  The mortgage brokers and appraises received continued business along with ‘incentive’ payments such as cash or hidden interests in real estate deals.

Once the loans had been approved by the lending institutions, Bergdoll, Romeo and Matos referred the buyers to Innarelli and other attorneys. Innarelli generated false closing documentation to facilitate and conceal the fraud.  Innarelli received both continued business and ‘incentive’ payments such as cash or hidden interests in real estate deals. Anticipating foreclosure, Innarelli withheld real estate and utility payments owed by buyers at closing and kept the payments for his personal use.

mortgage fraud