Benjamin Osmanson, 31, California, the former operator of the Highgate Manor, Highgate, Vermont, was sentenced to nine years in prison, to be followed by five years of supervised release, and ordered to pay over $12 million in restitution during an appearance before the Hon. J. Garvan Murtha in federal court in Brattleboro, Vermont.
As previously reported on Mortgage Fraud Blog, Osmanson pleaded guilty in September 2009 to three counts of conspiracy, wire fraud, and money laundering related to his scheme to defraud mortgage lenders by submitting false loan applications in the names of “investors.” Osmanson was arrested in October 2008 in Texas, and has been detained since that time.
Osmanson’s co-defendant Jillian Protzman pled guilty on August 17, 2009, to two counts of conspiracy and money laundering, and was sentenced to six months in jail, and ordered to pay 30% of $12 million owed in restitution. Former Florida realtor Margaret Giresi, who pled guilty in September 2008 to related conspiracy charges was sentenced to three years of probation. Two mortgage brokers involved in the scheme, Mike Otis and Chris Whitfield pled guilty earlier this year in the Western District of Kentucky at Louisville, and are awaiting sentencing. Charges against another involved mortgage broker, Richard Hild, remain pending in the Western District of Kentucky.
The charges to which Osmanson pled guilty allege that from at least as early as January 2006 through at least April 2007, Osmanson and Protzman orchestrated the purchase of at least 50 properties in California, Florida, Kentucky, and Vermont in the names of at least 10 investors, obtaining more than $26,000,000.00 in loans to support the purchases. According to the indictment, Osmanson recruited friends, family members, and acquaintances to “invest” in real estate. Osmanson and Protzman then submitted fraudulent loan applications in the names of the investors to obtain fully-financed mortgage loans. The indictment states that Osmanson, Protzman, and others sought loans from multiple lenders, and closed the loans for each investor within a short period of time, in order to preserve the appearance of the investor’s good credit until the transactions were complete. The indictment further alleges that Osmanson and Protzman enriched themselves with “rebates,” “fees,” and commissions connected to the fraudulent property purchases, and continued to recruit investors and submit applications for new loans even after the loans to the initial investors began to fail.
During the sentencing hearings, the Court heard testimony about the operation of the scheme, including how false documents were created and submitted to lenders to support loan applications and how the “rebate” payments were arranged. The over $12 million in restitution ordered represents the outstanding losses to the lending institutions after foreclosure sales on the involved properties.
The announcement was made by The Office of the United States Attorney for the District of Vermont.
The United States Attorney commended the Federal Bureau of Investigation and the Internal Revenue Service, Criminal Investigations Division, for their hard work on this matter. The United States was represented by Assistant U.S. Attorney Eugenia A. P. Cowles. Mr. Osmanson was represented by Assistant Federal Public Defender Alison S. Arms. Margaret Giresi was represented by Attorney John Mabie and Jillian Protzman as represented by Attorney Mark Kaplan.