William A. Trudeau, Jr., 50, Norwalk, Connecticut, was sentenced by United States District Judge Janet C. Hall in New Haven to 188 months of imprisonment, followed by five years of supervised release, for operating a mortgage fraud scheme in Fairfield County, Connecticut.
In addition, Trudeau‘s wife, Heather Bliss, 37, was sentenced to 30 months of imprisonment, followed by three years of supervised release, for her role in the scheme. Bliss was also ordered to pay a fine of $12,500.
On October 9, 2012, a jury found Trudeau guilty of one count of conspiracy to commit bank fraud, mail fraud and wire fraud, and one count of wire fraud. On July 30, 2010, Bliss pleaded guilty to one count of conspiracy to commit wire fraud.
According to the evidence and witness testimony during Trudeau‘s trial, in 2004, Trudeau and Joseph Kriz, a real estate attorney in Wilton, formed Aspetuck Building & Development through which Trudeau, Kriz and others intended to purchase, develop and sell properties. Trudeau was an unnamed principal in the business. Bliss was employed as a paralegal for Kriz and, in that capacity, had responsibility for preparing and maintaining all legal and bank documents related to real estate transactions handled by Kriz.
From approximately February 2004 to April 2010, Trudeau conspired with Bliss, Kriz, Fred Stevens, Thomas Preston and others to defraud federally insured financial institutions and mortgage lenders. As part of the scheme, Trudeau and his co-conspirators submitted false mortgage loan applications to financial institutions to obtain mortgages on various properties in Fairfield County in order to develop and sell the properties for profit, and to pay off debts owed to “hard money” lenders from whom they had previously obtained high interest loans. The mortgage applications, which included false income information and omitted the mortgage applicants’ true indebtedness, caused the financial institutions to issue mortgage loans on properties that Trudeau and his co-conspirators would not have otherwise been qualified to purchase, allowing the applicants to qualify for mortgages that far exceeded their ability to repay the loans.
As a paralegal, Bliss prepared and maintained numerous fraudulent mortgage documents involved in the scheme. She also overstated her income on mortgages for which she had personally applied, and applied for new mortgages within 60 days of receiving prior mortgages knowing that the earlier mortgage would not be revealed when Bliss‘s credit report was run by the financial institution to which she applied.
Bliss also nominally owned Huntington South Associates, LLC, a shell company that Trudeau used to pay for personal expenses and to secure loans fraudulently. During the scheme, Bliss used mortgage funds that were wired into Huntington South Associates‘ bank account as her “business income” on mortgage loan applications in order to qualify for additional mortgages, including a $1.3 million mortgage on a property in Westport, Connecticut.
As a result of a 2003 federal conviction for fraud and tax offenses, Trudeau was prohibited from owning or operating any business that was not in his own name, from incurring new credit charges or opening additional lines of credit without prior approval from the U.S. Probation Office, and he was required to release all of his financial information to the Probation Office. He also was ordered to pay more than $450,000 in restitution. According to the evidence and testimony at his trial, Trudeau‘s name did not appear on any documentation related to the loans or the properties for which the loans were obtained, and money was hidden in bank accounts that were not in Trudeau‘s name in part to prevent the collection of his court-ordered restitution.
Toward the end of the conspiracy, Trudeau, with the assistance of others, sought additional monies from a private lender purportedly to complete construction on one of the properties. Trudeau claimed to have a signed purchase contract for the property when, in truth, he did not. The evidence at trial established that Trudeau took the money for uses unrelated to the completion of the property.
Through this scheme, Trudeau and his co-conspirators fraudulently obtained more than $4 million in mortgage loans to purchase six properties in Westport and Newtown, Connecticut. To date, mortgage lenders have lost more than $1.9 million. In addition, during the scheme, Trudeau defrauded private lenders of a total of more than $1 million, and Kriz stole approximately $3.5 million from his IOLTA account. More than $1.2 million of the stolen IOLTA account funds were deposited into the bank account of Huntington South Associates and used during the conspiracy.
Trudeau and Bliss will be ordered to pay restitution of more than $4.2 million.
Trudeau, whose criminal history includes approximately 13 felony convictions, has been detained since August 9, 2011, when his bond was revoked.
Kriz, Stevens and Preston have pleaded guilty to charges related to their involvement in this scheme and await sentencing.
The United States Attorney for the District of Connecticut announced the sentence.
This matter was investigated by the Federal Bureau of Investigation. The case is being prosecuted by Assistant United States Attorneys Rahul Kale and Christopher Schmeisser.
The announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants.