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Gabriel T. Tavarez, 39, and Jaime L. Mulvihill, 40, who together founded and operated Loss Mitigation Services, LLC, a mortgage short sale assistance company were charged today in connection with defrauding mortgage lenders and investors out of nearly $500,000 in proceeds from about 90 short sale transactions.

The defendants allegedly defrauded the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation and the U.S. Department of Housing and Urban Development.

Tavarez and Mulvihill were charged with conspiracy to commit wire fraud. Tavarez also was charged with aggravated identity theft.

The charges arise out of the defendants’ alleged scheme to steal undisclosed and improper fees from mortgage lenders in connection with short sales of homes. A short sale occurs where the mortgage debt on the home is greater than the sale price, and the mortgage lender agrees to take a loss on the transaction.

Loss Mitigation Services, purportedly acting on behalf of underwater homeowners, negotiated with mortgage lenders for approval of short sales in lieu of foreclosure. Mortgage lenders typically forbid short sale negotiators, such as Loss Mitigation Services, from receiving any proceeds of a short sale.

According to the court documents, from 2014 to 2017, Tavarez and Mulvihill, directly or through their employees, falsely claimed to homeowners, real estate agents, and closing attorneys that mortgage lenders had agreed to pay Loss Mitigation Services fees known as “seller paid closing costs” or “seller concessions” from the proceeds of the short sales. In reality, the mortgage lenders had never approved Loss Mitigation Services to receive those fees. When the short sales closed, at the instruction of Tavarez or Mulvihill, or others working with them, settlement agents paid Loss Mitigation Services the fees, which typically were 3% of the short sale price above and beyond any fees to real estate agents, closing attorneys and others involved in the transaction. To deceive mortgage lenders about the true nature of the fees, Tavarez or Mulvihill filed, or caused others to file, false short sale transaction documents with mortgage lenders, including altered settlement statements and fabricated contracts and mortgage loan preapproval letters. Tavarez and Mulvihill fabricated the transaction documents, or caused them to be fabricated, in order to justify the additional fees and conceal that they were being paid to Loss Mitigation Services. In addition, Tavarez created fake letters from mortgage brokers claiming that the brokers had approved buyers for financing, in order to convince mortgage lenders to approve the additional fees.

The charge of conspiracy to commit wire fraud provides for a sentence of up to 20 years in prison, three years of supervised release, and a fine of $250,000 or twice the gross gain or loss. The charge of aggravated identity theft carries a mandatory two-year sentence that must run consecutively to any other sentence imposed, one year of supervised release, and a fine of $250,000, or twice the gross gain or loss. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.

United States Attorney Andrew E. Lelling; Joseph R. Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; Robert Manchak, Inspector General of the Federal Housing Finance Agency; Christina Scaringi, Special Agent in Charge of the U.S. Department of Housing and Urban Development, Office of Inspector General, Northeast Regional Office; and Kristina O’Connell, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston made the announcement today. Assistant U.S. Attorneys Sara Miron Bloom and Brian M. LaMacchia of Lelling’s Office are prosecuting the case.

The details contained in the charging documents are allegations. The defendants are presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

Nuhu (aka Nurden aka Noah) Mohammed, 60, Foxborough, Massachusetts has been indicted, arrested, and arraigned today in connection with a mortgage fraud scheme that largely targeted immigrant families.

The AG’s Office alleges that between October 2012 and July 2019, Mohammed repeatedly represented himself as a mortgage broker or lawyer, promising victims that he could provide assistance in securing mortgages and/or loan modifications. While Mohammed allegedly collected thousands of dollars from these victims, many of whom were at risk of foreclosure, he did not provide any meaningful assistance in securing these mortgages or modifying loans. He also allegedly directed his clients to forward all correspondence between clients and loan servicers to him and asked any letters to remain unopened to prevent them from discovering that he had not provided any assistance.

As a result of these alleged actions, one affected family lost two properties to foreclosure, and all of the victims lost significant amounts of money. Investigators allege that Mohammed primarily targeted immigrant families and exploited their lack of knowledge about the residential mortgage and/or loan modification process, as well as their limited English language proficiency, to steal from them.

The AG’s Office also alleges that Mohammed used the personal identifying information of one of his victims to open two credit cards in her name without her knowledge or consent.

In total, the AG’s Office alleges that Mohammed stole $152,333 from clients, including the money that he charged on the alleged fraudulent credit cards.

Mohammed was arrested on Thursday by Massachusetts State Police assigned to the AG’s Office in Boston. He was arraigned today in Norfolk Superior Court and was held on $50,000 bail. He was ordered to have no contact with the victims, and if he posts bail, he will be required to meet weekly with probation officers and not leave the state. He is due to appear in Norfolk Superior Court on November 15, 2019 for a status hearing.

Mohammed was indicted by a Statewide Grand Jury on the charges of Larceny Over $250 (1 count), Larceny Over $250 by Single Scheme (6 counts), Larceny Over $1,200 by Single Scheme (3 counts), Forgery (1 count), Uttering (1 count), Identity Fraud (2 counts), False Material Statements or Omissions During or In Connection with Mortgage Lending Process (4 counts), Fraudulent Use of Credit Cards to Obtain Money, Goods or Services (2 counts), and Common and Notorious Thief (1 count).

Attorney General Maura Healey made the announced.

This case was referred to the AG’s Office by the Stoughton Police Department.

These charges are allegations and the defendant is presumed innocent until proven guilty.

This investigation is ongoing, and the AG’s Office believes that this defendant has used several aliases to hide his identity. If any member of the public believes they may have been victimized by this conduct or has any information relating to others who may have been victimized, they are encouraged to contact the White Collar and Public Integrity Division of the Attorney General’s Office.

This case is being prosecuted by Assistant Attorney General Gretchen Brodigan and Assistant Attorney General Sara Yoffe, of the AG’s White Collar and Public Integrity Division, with assistance from Financial Investigator Anthony Taylor, Victim Witness Advocate Megan Murphy, the AGO’s Digital Evidence Lab, Massachusetts State Police assigned to the AG’s Office, and the Stoughton Police Department.

Robert Pena, 69, the president and founder of a Falmouth mortgage company was sentenced yesterday in connection with defrauding the Government National Mortgage Association (Ginnie Mae) out of approximately $2.5 million.

The charges arise out of Pena’s scheme to defraud Ginnie Mae, a government-run corporation charged with making housing more affordable by injecting capital into the U.S. housing market. Ginnie Mae, which is part of the U.S. Department of Housing and Urban Development (HUD), guarantees the timely payment of principal and interest to investors in bonds backed by government-sponsored mortgage loans, such as those offered by the Federal Housing Administration and the U.S. Department of Veterans Affairs.

MSI contracted with Ginnie Mae to pool eligible residential mortgage loans and then sell Ginnie Mae-backed mortgage bonds to investors. MSI was responsible for servicing the loans in the pools it created, including collecting principal and interest payments from borrowers, as well as loan payoffs, and placing those funds into accounts held in trust by Ginnie Mae, which would ultimately pass them along to investors. Among other things, Ginnie Mae required issuers like MSI to provide regular reports to Ginnie Mae concerning the status of the loans in the pools.

Beginning in 2011, Pena began diverting money that borrowers were sending to MSI.  Specifically, Pena deposited high-dollar, loan-payoff checks into bank accounts unknown to Ginnie Mae and then used those funds for personal and business expenses. Pena also diverted borrowers’ escrow funds and mortgage-insurance premiums for his own use. In total, Pena took approximately $2.5 million, which Ginnie Mae then had to pay to investors whose investments it had guaranteed. Pena also attempted to cover up his scheme by providing false reports to Ginnie Mae about the status of the loans MSI was servicing. These false reports made it appear that the loans were still in repayment.

Pena’s co-conspirator, Gilda Andrade, who worked for Pena at MSI and helped Pena file false reports with Ginnie Mae, cooperated with the government’s investigation. Andrade pleaded guilty to a misdemeanor charge of making a false statement to HUD in December 2017, and was previously sentenced to one year probation and ordered to pay $108,240 in restitution to Ginnie Mae.

Pena was sentenced to 32 months in prison, two years of supervised release, and ordered to pay $2.5 million in restitution to Ginnie Mae. In October 2017, Pena pleaded guilty to an indictment charging him with one count of conspiracy and six counts of wire fraud.

United States Attorney Andrew E. Lelling; Christina Scaringi, Special Agent in Charge of the U.S. Department of Housing and Urban Development, Office of Inspector General, Northeast Regional Office; and Joseph Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement today. The U.S. Attorney’s Office wishes to acknowledge the invaluable assistance of the U.S. Department of Veterans Affairs, Office of Inspector General; the U.S. Department of Agriculture, Office of Inspector General; and the Falmouth Police Department. Assistant U.S. Attorney Brian M. LaMacchia prosecuted the case.

Caliber Homes Loans Inc. (Caliber) will pay $2 million and undertake affordable loan modifications for affected Massachusetts homeowners,. The settlement resolves allegations that Caliber failed to help borrowers avoid foreclosure and instead gave homeowners unaffordable loan modifications with ballooning monthly payments they could not afford.

In an assurance of discontinuance filed in Suffolk Superior Court, Caliber has agreed to provide restitution and loan modifications to homeowners in Massachusetts and change its business practices to comply with state law.

The AG’s Office alleges Caliber violated the Massachusetts Act Preventing Unlawful and Unnecessary Foreclosures, known as “35B,” a landmark law passed in 2012 that protects certain borrowers from foreclosure. The law requires creditors to make a good faith effort to avoid foreclosure for borrowers whose mortgage loans have unfair subprime terms.

The AG’s Office began its investigation after observing through the AG’s consumer assistance work that Caliber predominantly offered struggling homeowners loan modifications with payments that were temporarily lower and only covered the interest due on the loan each month. After a few years, however, borrowers would see their mortgage payments balloon to an amount even higher than what they originally were paying and could not afford, setting borrowers up to again face foreclosure.

The AG’s investigation found that Caliber favored these short-term, interest-only loan modifications over permanent, affordable modifications even in cases where a permanent modification was commercially reasonable. The company also routinely gave borrowers the runaround about missing documents required for the loan modification review process.

Under the terms of the settlement, Caliber will provide loan modification relief to Massachusetts borrowers who applied for modifications and were foreclosed upon due in part to Caliber’s conduct. Caliber will also institute a new loan modification program and review Massachusetts borrowers currently on interest-only or short-term modifications to provide them a more sustainable, affordable modification.

Attorney General Maura Healey made the announcement today.

Mortgage servicing companies have a duty to help Massachusetts residents avoid foreclosure and stay in their homes,” said AG Healey. “Our settlement with Caliber will provide relief to borrowers across the state and sends a clear message that we will protect homeowners when companies break the law.”

The AG’s Office has been a national leader in securing restitution and other relief for borrowers from banks and servicers. The office has obtained recoveries and other relief from Morgan StanleyGoldman SachsRoyal Bank of ScotlandCitigroupJPMorgan ChaseCountrywideFremont Investment & LoanOption OneHSBCDitech, Nationstar Mortgage, Shellpoint Mortgage Servicing, PHH and others on behalf of Massachusetts homeowners.

Consumers with questions or concerns about deceptive or abusive foreclosure and loan servicing practices can call the Attorney General’s consumer hotline at 617-727-8400 or file a complaint with the office.

This matter was handled by Assistant Attorneys General Michael Lecaroz and Lisa Dyen and Division Chief Max Weinstein, all of the AG’s Consumer Protection Division.

 

Ocwen Loan Servicing LLC, one of the nation’s largest mortgage servicers will pay $2 million in restitution to resolve allegations that it violated state law and committed unfair and deceptive practices by charging Massachusetts homeowners for unnecessary fees and overpriced force-placed insurance policies.

The AG’s complaint alleged that Ocwen committed widespread mortgage servicing violations that increased Massachusetts borrowers’ mortgage and insurance expenses, exposed borrowers to serious risk through insurance lapses, and contributed to loan delinquencies and foreclosures. When borrowers requested information about or disputed errors on their loan accounts, Ocwen failed to respond to the requests as required by law. According to the complaint, Ocwen’s violations include:

  • Unnecessary flood insurance: Ocwen force-placed borrowers in expensive flood insurance policies for time periods when properties were not in special hazard flood area and did not require flood insurance. The force-placed policies carried high deductibles and did not provide critical liability and personal property coverage to borrowers.
  • Improperly administering insurance premiums: Ocwen forced borrowers to pay their insurance premiums into an escrow account and then failed to disburse these escrowed insurance premiums to insurers, causing borrowers’ insurance policies to lapse and leaving them exposed to serious gaps in insurance coverage.
  • Charging inflated and duplicative fees: Ocwen took advantage of struggling borrowers by charging duplicative and unnecessary pre-foreclosure property inspection and preservation fees for grass cuts, landscaping, and title review. In some cases, Ocwen conducted three property inspections in the same month and ordered several grass cuts within the same week, then passed the costs on to the borrower.
  • Failing to respond to borrower disputes and requests for information: Ocwen failed to provide timely and adequate responses to borrowers’ requests for information, complaints, and notices of error, causing problems to go unaddressed.

Under the terms of the consent judgment, Ocwen will pay $2 million in restitution including direct cash refunds and account credits. Ocwen will send notifications to 4,000 borrowers who may be eligible to receive a loan modification and has also agreed to halt foreclosure proceedings for certain homeowners to allow them time to apply for the loan modification. Ocwen will also pay three times the damages for borrowers for whom the company wrongfully failed to disburse escrowed insurance premiums and reimburse borrowers who were unnecessarily charged for flood insurance policies. Finally, Ocwen will implement new policies relating to the handling of customer complaints.

Attorney General Maura Healey made the announcement today.

The consent judgment, entered in Suffolk Superior Court, settles a lawsuit filed by the AG’s Office in April 2017 against Ocwen Loan Servicing LLC, which services tens of thousands of mortgages for Massachusetts homeowners.

Keeping families in their homes remains a top priority for my office,” said AG Healey. “This settlement will provide relief to thousands of Massachusetts homeowners harmed by abusive and unfair mortgage servicing practices.”

The AG’s Office has been a national leader in securing restitution and other relief for borrowers from banks and servicers. The office has obtained recoveries and other relief from Morgan StanleyGoldman SachsRoyal Bank of ScotlandCitigroupJPMorgan ChaseCountrywideFremont Investment & LoanOption OneDitechHSBC, PHH, Nationstar, Shellpoint and others on behalf of Massachusetts homeowners.

The AG’s Office has also brought a string of force-placed insurance cases and obtained over $12 million in related recoveries under settlements with HSBC, American Security Insurance Company (Assurant), and QBE Insurance.

This matter was handled by Assistant Attorneys General Michael Lecaroz and Sarah Petrie, and Deputy Division Chief Shennan Kavanagh, all of the AG’s Consumer Protection Division; and Assistant Attorney General Tim Hoitink and Deputy Director Arwen Thoman of the AG’s Insurance and Financial Services Division.

 

Patrick Lee, 46, formerly of Canton and Easton, Massachusetts,  a dual United States-Irish citizen was sentenced yesterday on charges arising out of a multi-year mortgage fraud scheme.

Between July 2005 and May 2007, Lee engaged with others in a mortgage fraud scheme. Specifically, Lee or a relative bought five multi-family buildings in Dorchester and South Boston, Massachusetts financed those purchases with fraudulently obtained mortgage loans, and quickly converted the buildings to condominiums which facilitated the resale of individual units in the buildings to straw buyers. The straw buyers were recruited for this purpose and their purchases were financed with fraudulently obtained mortgage loans. The straw buyers were assured that they would not have to put any money down or pay the mortgages, and that they would get a fee at closing and/or a share of the profits when the properties were sold. The loans were funded with interstate wire transfers from the mortgage lenders to the closing attorneys’ conveyancing accounts, and the proceeds were then distributed to Lee and/or a family member, the recruiters, and others involved in the scheme. According to the government, mortgage lenders suffered losses of about $3.9 million. Many of the lenders are no longer in business or no longer hold the fraudulent loans at issue. http://www.mortgagefraudblog.com/?s=Patrick+Lee

Lee was sentenced to four years in prison, three years of supervised release, and ordered to pay restitution of $842,552 to victim lenders. Lee will also be subject to asset forfeiture, in an amount to be determined later.

In November 2018, Lee pleaded guilty to wire fraud and making an unlawful monetary transaction. He was extradited from Ireland in 2017 to face the charges, marking the first extradition from Ireland to the United States since 2012.

United States Attorney Andrew E. Lelling; Kristina O’Connell, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigations in Boston; Stephen A. Marks, Special Agent in Charge of the U.S. Secret Service, Boston Field Office; and John Gibbons, U.S. Marshal for the District of Massachusetts, made the announcement today. Assistant U.S. Attorneys Sandra S. Bower and Christine Wichers of Lelling’s Criminal Division prosecuted the case.

David Plunkett, 53, Lynn, Massachusetts pleaded guilty today to assisting a multi-year mortgage fraud scheme by creating fraudulent tax returns and submitting fraudulent letters to lenders.

George Kritopoulos, 46, Salem, Massachusetts, one of the alleged leaders of the mortgage fraud scheme, was indicted in September 2018, and has pleaded not guilty. Co-conspirator, Joseph Bates III, 38, of Lynnfield, Massachusetts pleaded guilty in October 2018 to one count of conspiracy, three counts of wire fraud affecting a financial institution, and two counts of bank fraud.

According to the charging documents, from 2006 through 2015, Bates and others engaged in a scheme to defraud banks and other financial institutions by causing false information to be submitted to those institutions on behalf of borrowers, people recruited to purchase properties, located primarily in Salem, Massachusetts. The properties were usually multi-family buildings with two-to-four units, which the co-conspirators then converted into condominiums. The co-conspirators recruited other borrowers to purchase the individual condominium units, which were also financed by fraudulent mortgage loans.

The false information submitted to lenders included, among other things, representations concerning the borrowers’ employment, income, assets, and intent to occupy the property. Specifically, the false employment information included representations that borrowers were employed by entities that were, in fact, shell companies used to advance the fraudulent scheme. The employment information included false representations about the income that the borrowers received from the entities, when, in fact, the borrowers received little or no income from them.  Furthermore, the income asserted on the borrowers’ loan applications substantially overstated their true income. The false information also included representations that the recruited borrowers intended to live in the properties that they were purchasing, when the borrowers, in fact, did not intend to do so.

Plunkett assisted the scheme by preparing tax returns for some of the borrowers that contained false and inflated income. Some of those tax returns were submitted to lenders in support of the fraudulent loan applications. Plunkett also signed letters falsely representing that his CPA firm had prepared corporate tax returns for one of the shell entities, when in fact no such returns had ever been prepared or filed.

Because the borrowers did not have the financial ability to repay the loans, in many instances, they defaulted on their loan payments, resulting in foreclosures and millions of dollars of losses to the financial institutions. http://www.mortgagefraudblog.com/?s=David+Plunkett

Plunkett plead guilty to one count of bank fraud and one count of aiding in the submission of false tax returns.

The charge of bank fraud provides for a sentence of no greater than 30 years in prison, five years of supervised release, and a fine of $1 million, or twice the gross gain or loss, whichever is greater. The charge of aiding in filing a false tax return provides for a sentence of no greater than three years in prison, one year of supervised release, and a fine of $250,000, or twice the gross gain or loss, whichever is greater. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.

U.S. District Court Judge Richard G. Stearns scheduled sentencing for June 25, 2019.

United States Attorney Andrew E. Lelling; Joseph R. Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; Christina Scaringi, Special Agent in Charge of the U.S. Department of Housing and Urban Development, Office of Inspector General, Northeastern Regional Office; and Kristina O’Connell, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston, made the announcement today. Assistant U.S. Attorneys Mark J. Balthazard and Sara Miron Bloom of Lelling’s Securities and Financial Fraud Unit are prosecuting the case.

The details contained in the charging documents are allegations. The remaining defendants are presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

 

Allen Seymour, 50 and Tina Seymour, 46, both from Oxford, Massachusetts have been indicted today in connection with a scheme to defraud homeowners and mortgage lenders by providing fraudulent documents in legal and real estate transactions in Cambridge and Brookline, Massachusetts.

The Attorney General’s Office alleges that throughout 2017 and 2018, Allen Seymour repeatedly targeted homeowners, including elderly residents, to fraudulently gain control of residential properties and resell them at a profit to investors. The AG’s Office also alleges that Seymour forged power of attorney documents in the name of homeowners and others to gain control over the seller’s proceeds, and then laundered those funds through third party accounts.

Allen Seymour was arrested in South Carolina in May and is currently being held without bail pending probation surrender hearing scheduled for a later date. Seymour will appear in Worcester Superior Court on January 9, 2019 for a hearing regarding his probation surrender.

The AG’s Office alleges that Allen’s former wife, Tina Seymour, assisted with these forgeries and provided unauthorized access to notary stamps.

In 2010, Seymour previously pleaded guilty and was sentenced to state prison for a similar mortgage fraud scheme prosecuted by the AG’s Office.

Allen Seymour was indicted by a Statewide Grand Jury on charges of Forgery (7 counts), Uttering (5 counts), Larceny over $250 (5 counts), and Money Laundering (5 counts). Tina Seymour was indicted for Conspiracy to Commit Forgery (2 Counts). Allen Seymour will be arraigned in Norfolk Superior Court at a later date. Tina Seymour will be arraigned in Hampden Superior Court at a later date.

These new charges are allegations and the defendants are presumed innocent until proven guilty. The investigation into this matter is ongoing.

Attorney General Maura Healey made the announcement today.

This case is being prosecuted by Assistant Attorneys General Edward Beagan and Sara Shannon of AG Healey’s White Collar & Public Integrity Division, and investigated by Anthony Taylor of the AG’s Financial Investigations Division. The Massachusetts State Police, the Brookline Police, the Cambridge Police, the Federal Bureau of Investigations, and the Horry County Sheriff’s Department of South Carolina assisted with this investigation.

Patrick Lee, 45, formerly of Canton and Easton, Massachusetts, a dual U.S.-Irish citizen,  pleaded guilty yesterday to charges arising out of a multi-year mortgage fraud scheme.

Between July 2005 and May 2007, Lee engaged with others in a mortgage fraud scheme. Specifically, Lee or a relative bought five multi-family buildings in Dorchester and South Boston, Massachusetts financed those purchases with fraudulently obtained mortgage loans, and quickly converted the buildings to condominiums which facilitated the resale of individual units in the buildings to straw buyers. The straw buyers were recruited for this purpose and their purchases were financed with fraudulently obtained mortgage loans. The straw buyers were assured that they would not have to put any money down or pay the mortgages, and that they would get a fee at closing and/or a share of the profits when the properties were sold. The loans were funded with interstate wire transfers from the mortgage lenders to the closing attorneys’ conveyancing accounts, and the proceeds were then distributed to Lee and/or a family member, the recruiters, and others involved in the scheme. According to the government, mortgage lenders suffered losses of more than $1.5 million.

Lee pleaded guilty to wire fraud and making an unlawful monetary transaction. Chief U.S. District Judge Patti B. Saris scheduled sentencing for Feb. 28, 2019. Lee was extradited from Ireland to the United States last year to face the charges. It was Ireland’s first extradition to the United States since 2012.

The charge of wire fraud provides for a sentence of no greater than 20 years in prison, three years of supervised release, and a fine of $250,000 or twice the gross gain or loss, whichever is greater. The charge of unlawful monetary transactions provides for a sentence of no greater than 10 years in prison, three years of supervised release, and a fine of $250,000 or twice the amount of criminally derived property. Sentences are imposed by a federal district court judge based on the U.S. Sentencing Guidelines and other statutory factors.

United States Attorney Andrew E. Lelling; Kristina O’Connell, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigations in Boston; and Stephen A. Marks, Special Agent in Charge of the U.S. Secret Service, Boston Field Office, made the announcement today. Assistant U.S. Attorneys Sandra S. Bower and Christine Wichers of Lelling’s Criminal Division are prosecuting the case.

 

Joseph Bates III, 38, Wakefield, Massachusetts pleaded guilty today in connection with a decade-long mortgage fraud scheme involving at least two dozen fraudulent loan transactions and $4.3 million in losses to lenders.

According to the charging documents, from 2006 through 2015, Bates and others engaged in a scheme to defraud banks and other financial institutions by causing false information to be submitted to those institutions on behalf of borrowers, people recruited to purchase properties, located primarily in Salem,Massachusetts . The properties were usually multi-family buildings with two-to-four units, which the co-conspirators then converted into condominiums. The co-conspirators recruited other borrowers to purchase the individual condominium units, which were also financed by fraudulent mortgage loans. http://www.mortgagefraudblog.com/?s=Joseph+Bates+III

Bates was charged with one count of conspiracy, three counts of wire fraud affecting a financial institution, and two counts of bank fraud. A sentencing date has not yet been scheduled. One of Bates’ alleged co-conspirators, George Kritopoulos, 46, Salem, Massachusetts was indicted on related charges in September 2018, and another participant, David Plunkett, 52, Lynn, Massachusetts was charged by Information.

The false information submitted to lenders included, among other things, representations concerning the borrowers’ employment, income, assets, and intent to occupy the property. Specifically, the false employment information included representations that borrowers were employed by entities that were, in fact, shell companies used to advance the fraudulent scheme. The employment information included false representations about the income that the borrowers received from the entities, when, in fact, the borrowers received little or no income from them.  Furthermore, the income asserted on the borrowers’ loan applications substantially overstated their true income. The false information also included representations that the recruited borrowers intended to live in the properties that they were purchasing, when the borrowers, in fact, did not intend to do so. Plunkett allegedly assisted the scheme by preparing tax returns for some of the borrowers that contained false and inflated income. Some of those tax returns were submitted to lenders in support of the fraudulent loan applications.

Because the borrowers did not have the financial ability to repay the loans, in many instances, they defaulted on their loan payments, resulting in foreclosures and losses to the financial institutions of more than $4.3 million.

The charges of bank fraud and wire fraud affecting a financial institution each provide for sentences of no greater than 30 years in prison, five years of supervised release, and a fine of $1 million. The charge of conspiracy provides for a sentence of no greater than five years in prison, three years of supervised release, and a fine of $250,000, or twice the gross gain or loss, whichever is greater. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.

United States Attorney Andrew E. Lelling; Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; Christina Scaringi, Special Agent in Charge of the U.S. Department of Housing and Urban Development, Office of Inspector General, Northeast Regional Office; and Kristina O’Connell, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston, made the announcement today.  Assistant U.S. Attorneys Mark J. Balthazard and Sara Miron Bloom of Lelling’s Securities and Financial Fraud Unit are prosecuting the case.

The details contained in the charging documents are allegations. The remaining defendants are presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.