David Plunkett, 57, Lynn, Massachusetts, was sentenced today in federal court in Boston for creating fraudulent tax returns and submitting fraudulent letters to lenders in a multi-year mortgage fraud scheme.

Plunkett was charged in September 2018 along with co-defendants Joseph Bates III and George Kritopoulos.  From 2006 through 2015, Bates, Kritopoulos and Plunkett 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 Kritopoulos and Bates then converted into condominiums. Kritopoulos recruited new borrowers to purchase the individual condominium units. Kritopoulos also recruited Plunkett to prepare false tax returns in the names of the buyers to support the fraud scheme. Together, Kritopoulos and Bates created other false documents and provided them to lenders to obtain fraudulent mortgages for financing the purchases.

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 “owned” by Kritopoulos and were used to advance the fraudulent scheme. The employment information also included false representations about the income that the borrowers received from the entities, when the borrowers actually 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 they 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.

The borrowers did not have the financial ability to repay the loans, therefore in all but two instances among 21 properties, they defaulted on their loan payments, resulting in foreclosures and losses to the lenders.

Plunkett was sentenced by U.S. District Court Judge Richard G. Stearns to time served (approximately one day in prison) and three years of supervised release. Plunkett was also ordered to pay $147,500 in restitution to victims and $64,284 in restitution to the Internal Revenue Service. In February 2019, Plunkett pleaded guilty to one count of bank fraud and one count of aiding in the submission of false tax returns.

In October 2022, Kritopoulos was sentenced to four years in prison and two years of supervised release after being convicted by a federal jury of one count of conspiracy, two counts of wire fraud, six counts of bank fraud, one count of aiding the preparation of a false income tax return and one count of obstruction of justice. Kritopoulos was also ordered to pay restitution to lender victims in the amount of $2,238,354 and forfeiture of $700,000. On Jan. 25, 2023, Bates was sentenced to 18 months in prison and three years of supervised release after previously pleading guilty to one count of conspiracy, three counts of wire fraud affecting a financial institution and two counts of bank fraud. Bates was also ordered to pay restitution in the amount of $2,238,354 and forfeiture of $700,000.

United States Attorney Rachael S. Rollins; Joseph R. Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigation, Boston 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 Joleen D. Simpson, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston made the announcement today. Assistant U.S. Attorneys Victor A. Wild, of Rollins’ Securities, Financial & Cyber Fraud Unit and Brian M. LaMacchia, of Rollins’ Affirmative Civil Enforcement Unit prosecuted the case.

Joseph Bates III, 42, Wakefield, Massachusetts, was sentenced today in federal court in Boston for a mortgage fraud scheme involving at least two dozen fraudulent loan transactions and $4.3 million in losses to lenders.

Bates was originally charged in September 2018 along with co-defendants George Kritopoulos and David Plunkett.  From 2006 through 2015, Bates, Kritopoulos 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, Mass. The properties were usually multi-family buildings with two-to-four units, which the co-conspirators then converted into condominiums. Kritopoulos recruited new borrowers to purchase the individual condominium units. Together, Kritopoulos and Bates created and provided false documents to defraud lenders for financing the purchases. Kritopoulos also recruited Plunkett to prepare false tax returns in support of the fraud scheme.

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 “owned” by Kritopoulos and were used to advance the fraudulent scheme. The employment information also included false representations about the income that the borrowers received from the entities, when the borrowers actually 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 they 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.

Because the borrowers did not have the financial ability to repay the loans, in all but two instances among 21 properties, they defaulted on their loan payments, resulting in foreclosures and losses to the lenders.

Bates was sentenced by U.S. Senior District Court Judge Douglas P. Woodlock to 18 months in prison and three years of supervised release. In October 2018, Bates pleaded guilty to one count of conspiracy, three counts of wire fraud affecting a financial institution, and two counts of bank fraud. Bates was also ordered to pay restitution in the amount of $2,238,354 and forfeiture of $700,000.

In October 2022, Kritopoulos was sentenced to four years in prison and two years of supervised release after being convicted by a federal jury of one count of conspiracy, two counts of wire fraud, six counts of bank fraud, one count of aiding the preparation of a false income tax return and one count of obstruction of justice. In February 2019, Plunkett pleaded guilty to one count of bank fraud and one count of aiding in the submission of false tax returns and is scheduled to be sentenced on Feb. 9, 2023.

United States Attorney Rachael S. Rollins; Joseph R. Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigation, Boston Division; Joleen D. Simpson, Special Agent in Charge of the Internal Revenue Service – Criminal Investigation Division, Boston Office; and Christina Scaringi, Special Agent in Charge of the U.S. Department of Housing and Urban Development, Office of Inspector General, Northeastern Regional Office made the announcement today. Valuable assistance was provided by the Salem Police Department. Assistant U.S. Attorneys Victor A. Wild, of Rollins’ Securities, Financial & Cyber Fraud Unit, and Brian M. LaMacchia, of Rollins’ Affirmative Civil Enforcement Unit prosecuted the case. Assistant U.S. Attorney Carol Head, Chief of Rollins’ Asset Recovery Unit, is handling the forfeiture and restitution aspects of the case.

George Kritopoulos, 50, Salem, Massachusetts, a former self-proclaimed Salem real estate developer has been convicted by a federal jury in Boston in connection with a 10-year mortgage fraud scheme involving at least two dozen fraudulent loan transactions totaling $6.5 million and resulting in more than $3.8 million in losses to lenders.

Kritopoulos was convicted on May 27, 2022, of one count of conspiracy, two counts of wire fraud, six counts of bank fraud, one count of aiding the preparation of a false income tax return and one count of obstruction of justice. U.S. District Court Judge Patti B. Saris scheduled sentencing for Sept. 29, 2022. Kritopoulos was charged in September 2018 along with co-defendants Joseph Bates III and David Plunkett.

From 2006 through 2015, Kritopoulos, 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. The properties were usually multi-family buildings with two-to-four units, which the co-conspirators then converted into condominiums. Kritopoulos recruited new borrowers to purchase the individual condominium units, which were also financed by mortgage loans obtained by fraud.

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 “owned” by Kritopoulos and were used to advance the fraudulent scheme. The employment information also 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. As a result, the income asserted on the borrowers’ loan applications that Kritopoulos submitted to lenders grossly inflated 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. Kritopoulos brought newly recruited borrowers to Plunkett, who then prepared tax returns 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 all but two instances among 21 properties, they defaulted on their loan payments, resulting in foreclosures and losses to the lenders of more than $3.8 million.

In addition, Kritopoulos sought to obstruct the federal criminal investigation into the mortgage fraud scheme by encouraging Bates and Plunkett to make false statements and create false documents he hoped would make the companies appear to have been legitimate.

In October 2018, Bates pleaded guilty to one count of conspiracy, three counts of wire fraud affecting a financial institution, and two counts of bank fraud. A sentencing hearing for Bates has not yet been scheduled by the Court. In February 2019, Plunkett pleaded guilty to one count of bank fraud and one count of aiding in the submission of false tax returns and is scheduled to be sentenced on September 15, 2022.

“Mr. Kritopoulos held himself out to be a prominent real estate developer and believed he was above the law. This guilty verdict makes it clear that he is not,” said United States Attorney Rachael S. Rollins. “Mr. Kritopoulos and his co-conspirators thought they could line their pockets by victimizing innocent lenders and borrowers. When the scheme began unraveling, Mr. Kritopoulos attempted to have his co-conspirators create phony documents, but they refused. In an interview, Mr. Kritopoulos lied to investigators. We are committed to holding those who engage in this type of behavior accountable.”

“This verdict proves that George Kritopoulos is a predator who repeatedly targeted young, financially vulnerable victims and exploited them to pad his own pockets while driving them deeper into debt. He lied to the banks on behalf of those victims and tried to obstruct our investigation,” said Joseph R. Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigation, Boston Division. “Mortgage fraud cases like this one are important to deter would-be fraudsters from acting, and to ensure those who commit fraud, like Kritopoulos, face justice. After all, this type of crime artificially influences home values and threatens the investments of lawful buyers.”

“Mortgage fraud, like many financial crimes, creates untold harm to individuals, communities, businesses and the integrity of the financial system,” said Joleen D. Simpson, Special Agent in Charge of the Internal Revenue Service – Criminal Investigation Division, Boston Office. “This guilty verdict is proof of IRS Criminal Investigation’s dedication to protecting the financial health of our communities when they are threatened.”

The charges of bank fraud and wire fraud each provide for sentences of up to 30 years in prison and five years of supervised release. The charge of obstruction of justice provides for a sentence of up to 20 years in prison and five years of supervised release. The charge of conspiracy provides for a sentence of up to five years in prison and three years of supervised release. The charge of aiding the preparation of false tax returns provides for a sentence of up to three years in prison and one year of supervised release. Each charge also carries 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 statutes which govern the determination of a sentence in a criminal case.

U.S. Attorney Rollins, FBI SAC Bonavolonta, IRS CI SAC Simpson and Christina Scaringi, Special Agent in Charge of the U.S. Department of Housing and Urban Development, Office of Inspector General, Northeastern Regional Office, made the announcement today. Valuable assistance was provided by the Salem Police Department. Assistant U.S. Attorneys Victor A. Wild, of Rollins’ Securities, Financial & Cyber Fraud Unit, and Brian M. LaMacchia, of Rollins’ Affirmative Civil Enforcement Unit, are prosecuting the case.