Man Sentenced for Role in Ex-Wife’s Scam to Defraud Bank

Allison Tussey —  May 3, 2012 — Leave a comment

Kevin W. Caffrey, 47, Wolcott, Connecticut, was sentenced by United States District Judge Janet C. Hall in Bridgeport to 12 months and one day of imprisonment, followed by three years of supervised release, for his role in his ex-wife’s scheme to defraud Webster Bank of more than $6.2 million.

According to court documents and statements made in court, between approximately May 2000 and May 2006, Caffrey was married to Susan Curtis, who worked in the Property Services Division of Webster Bank. The Property Services Division was responsible for, among other things, the acquisition and leasing of properties for Webster Bank’s Retail Banking business. In 2002, Curtis and Caffrey formed New House LLC and registered the limited liability company with the Connecticut Secretary of State’s Office. The only listed member for New House was Caffrey, and its business address was 272 Hauser Street in Waterbury, a property owned by Caffrey or his mother since the 1960s.

Later, Curtis and her current husband, Gary Stocking, Jr., established a company called Equity Realty, LLC.

As part of the scheme to defraud Webster Bank, Curtis, with Caffrey’s assistance, falsely represented to Webster Bank’s Vendor Management Department that New House LLC was a legitimate company entitled to certain fees because of real estate transactions entered into by the bank. In fact, New House LLC was a sham company that never acted as a broker or landlord in any real estate transactions and, between 2002 and at least 2008, Curtis, with the assistance of Caffrey, executed the scheme and caused Webster Bank to make approximately 90 payments totaling nearly $4.3 million to New House LLC. As part of the scheme, Caffrey had access and control over the New House LLC’s bank account, was aware of the fraudulent deposits made to the bank account, and was involved in the disbursement of funds from the bank account to himself and others.

In addition, Caffrey did not file federal tax returns on behalf of New House LLC, and failed to report the proceeds of the fraud on his personal federal tax returns. In the 2005 through 2008 tax years, Caffrey failed to report more than $353,000 in income, resulting in a tax loss to the government of $90,054.

On October 14, 2010, Caffrey pleaded guilty to one count of bank fraud and one count of filing a false tax return.

Judge Hall ordered Caffrey to pay, jointly and severally with Curtis, restitution in the amount of $4,295,588.01 to Webster Bank. Caffrey also was ordered to pay back taxes and interest in the total amount of $110,256.94.

On January 20, 2011, Curtis pleaded guilty to two counts of bank fraud and four counts of filing false tax returns stemming from the New House and Equity Realty schemes, which defrauded Webster Bank of approximately $6.2 million, and for fraudulently applying for, and receiving, a $649,000 mortgage loan from Bank of America for a property in East Hampton, Connecticut. On March 29, 2012, she was sentenced to 102 months of imprisonment and was ordered to pay restitution of $6,194,589.85 to Webster Bank and $617,228.66 to Bank of America. She also was ordered to pay to the IRS back taxes in the amount of $1,680,128.41.

On March 31, 2011, Gary Stocking, Jr. pleaded guilty to three counts of failing to file a return, supply information, and pay federal income taxes. On September 22, 2011, he was sentenced to 24 months of imprisonment.

David B. Fein, United States Attorney for the District of Connecticut, announced the sentence.

This matter was investigated by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation. The case was prosecuted by Assistant United States Attorneys Michael S. McGarry and Paul A. Murphy.

Allison Tussey

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