Stephen P. Connolly, 51, Copley, Ohio, was sentenced to five years in prison and ordered to pay more than $1 million in restitution after previously pleading guilty to crimes related to a mortgage-fraud scheme involving four properties in the Akron and Cleveland, Ohio areas.
Connolly pleaded guilty to two counts of bank fraud, three counts of wire fraud and one count of bankruptcy fraud detailing the fraud scheme. He diverted more than $1 million for his own personal use while working as a title agent licensed by the State of Ohio and the owner of Trident Title and Secura Title, according to court documents.
Between April 5, 2005 and February 28, 2007, Connolly, as the owner of Trident Title and Secura Title, acted as the title agent on four properties, one each located in Akron, Canal Fulton, Copley and North Ridgeville, Ohio. As the title agent, Connolly was responsible for using the mortgage loan proceeds wired from the second lender to pay off the lender holding the first mortgage loan once the second lender approved and funded the purchase or refinance loan application, according to court documents.
Instead, rather than paying off the mortgage loan held by the first lender, Connolly set up a personal bank account in the name that was very similar to the first lender’s company name and diverted the funds to that account or directly to his personal bank accounts, and converted the loan proceeds to his personal use. Connolly attempted to conceal the fraud by paying the first mortgage lenders in hopes that he would be able to pay them back, eventually, and no one would discover he diverted the money for his personal use. However, Connolly was not able to keep up with the payments and the properties went into foreclosure, according to court documents.
Once Connolly realized he could not keep up with the mortgage payments and the properties were going into foreclosure, he initiated the proceedings to file for bankruptcy and falsified his bankruptcy filing by failing to list the income he received in the form of the diverted mortgage proceeds into his personal accounts, rather than paying off the first mortgage loans on the properties, according to court documents.
As a result of the scheme, Connolly diverted over $1 million of the loan proceeds to his personal use, and caused substantial losses to the lenders and purchasers of the properties.
Steven M. Dettelbach, United States Attorney for the Northern District of Ohio made the announcement.
This case is being prosecuted by Assistant United States Attorney Mark S. Bennett and Special Assistant United States Attorneys Micah Ault and Dean Wyman, following an investigation by the Canton Offices of the Federal Bureau of Investigation and the Ohio Department of Insurance.