Archives For Short Sale Fraud

Role in Sweeping Mortgage Fraud Conspiracy gets Real Estate Broker Sentenced

Stephanie Abbott —  August 7, 2018 — Leave a comment

Greisy Jimenez, 50, Methuen, Massachusetts, a real estate broker, was sentenced today in connection with a sweeping conspiracy to defraud banks and mortgage companies by engaging in sham “short” sales of residential properties in Merrimack Valley, Massachusetts.

Three co-conspirators involved in the scheme have been sentenced after pleading guilty to conspiracy to commit bank fraud. In June 2018, Jasmin Polanco, 37, Methuen, Massachusetts, a real estate closing attorney, was sentenced to 15 months in prison, three years of supervised release and ordered to pay $1,224,489 in restitution. In May 2018, Vanessa Ricci, 41, Methuen, Massachusetts, a mortgage loan officer, was sentenced to six months in prison, three years of supervised release and ordered to pay restitution of $963,730. In March 2017, Hyacinth Bellerose, 51, Dunstable, Massachusetts, a real estate closing attorney, was sentenced to time served and one year of supervised release to be served in home detention. http://www.mortgagefraudblog.com/?s=Greisy+Jimenez

The charges arose out of a scheme to defraud various banks via bogus short sales of homes in Haverhill, Lawrence and Methuen, Massachusetts in which the purported sellers remained in their homes with their debt substantially reduced. A short sale is a sale of real estate for less than the value of any existing mortgage debt on the property. Short sales are an alternative to foreclosure that typically occur only with the consent of the mortgage lender. Generally, the lender absorbs a loss on the loan and releases the borrower from the unpaid balance. By their very nature, short sales are intended to be arms-length transactions in which the buyers and sellers are unrelated, and in which the sellers cede their control of the subject properties in exchange for the short-selling bank’s agreement to release them from their unpaid debt.

The conspiracy began in approximately August 2007 and continued through June 2010, a period that included the height of the financial crisis and its aftermath. Home values in Massachusetts and across the nation declined precipitously, and many homeowners found themselves suddenly “underwater” with homes worth less than the mortgage debt they owed. As part of the scheme, Jimenez, Polanco, Ricci, Bellerose and others submitted materially false and misleading documents to numerous banks in an effort to induce them to permit the short-sales, thereby releasing the purported sellers from their unpaid mortgage debts, while simultaneously inducing the purported buyers’ banks to provide financing for the deals. In fact, the purported sellers simply stayed in their homes, with their debt substantially reduced.

The conspirators falsely led banks to believe that the sales were arms-length transactions between unrelated parties; in fact, the buyers and sellers were frequently related, and the sellers retained control of (and frequently continued to live in) the properties after the sale. The conspirators also submitted phony earnings statements in support of loan applications that were submitted to banks in order to obtain new financing for the purported sales. In addition, the defendants submitted phony “HUD-1 Settlement Statements” to banks that did not accurately reflect the disbursement of funds in the transactions. HUD-1 Settlement Statements are standard forms that are used to document the flow of funds in real estate transactions. They are required for all transactions involving federally related mortgage loans, including all mortgages insured by the Federal Housing Administration.

Jimenez was sentenced by U.S. Senior District Court Judge Mark L. Wolf, to three years in prison, four years of supervised release, and ordered to pay a fine of $12,500. The court will determine issues of restitution and forfeiture on Aug. 29, 2018. In January 2018, Jimenez pleaded guilty to two counts of bank fraud and one count of conspiracy to commit bank fraud.

United States Attorney Andrew E. Lelling; Christina Scaringi, Special Agent in Charge of the Department of Housing and Urban Development, Office of Inspector General, New York Field Office; and Christy Goldsmith Romero, Special Inspector General of the Troubled Asset Relief Program, made the announcement. Assistant U.S. Attorney Stephen E. Frank, Chief of Lelling’s Economic Crimes Unit, and Assistant U.S. Attorneys Sara Miron Bloom and Victor A. Wild, also of the Economic Crimes Unit, prosecuted the cases.

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Role in Sweeping Mortgage Fraud Conspiracy Gets Real Estate Attorney Sentenced

Stephanie Abbott —  June 21, 2018 — Leave a comment

Jasmin Polanco, 37, Methuen, Massachusetts, a real estate attorney was sentenced today in connection with a sweeping conspiracy to defraud banks and mortgage companies by engaging in sham “short” sales of residential properties in Merrimack Valley, Massachusetts.

Co-defendants Vanessa Ricci, 41, Methuen, Massachusetts , a  mortgage loan officer, pleaded guilty in March 2018 to one count of conspiracy to commit bank fraud and was sentenced to six months in prison, three years of supervised release and ordered to pay restitution of $963,730 http://www.mortgagefraudblog.com/?s=Jasmin+Polanco; Greisy Jimenez, 50, Methuen, Massachusetts , a real estate broker, pleaded guilty to two counts of bank fraud and one count of conspiracy to commit bank fraud and is awaiting sentencing; Hyacinth Bellerose, 51, Dunstable, Massachusetts,  a real estate closing attorney, was sentenced in March 2017 to time served and one year of supervised release to be served in home detention after pleading guilty to conspiracy to commit bank fraud.  Polanco was sentenced by U.S. Senior District Court Judge Douglas P. Woodlock to 15 months in prison, three year of supervised release and ordered to pay $1,224,489 in restitution. In March 2018, Polanco pleaded guilty to one count of conspiracy to commit bank fraud.

The charges arose out of a scheme to defraud various banks via bogus short sales of homes in Haverhill, Lawrence and Methuen, Massachusetts, in which the purported sellers remained in their homes with their debt substantially reduced. A short sale is a sale of real estate for less than the value of any existing mortgage debt on the property. Short sales are an alternative to foreclosure that typically occur only with the consent of the mortgage lender. Generally, the lender absorbs a loss on the loan and releases the borrower from the unpaid balance. By their very nature, short sales are intended to be arms-length transactions in which the buyers and sellers are unrelated, and in which the sellers cede their control of the subject properties in exchange for the short-selling bank’s agreement to release them from their unpaid debt.

The conspiracy began in approximately August 2007 and continued through June 2010, a period that included the height of the financial crisis and its aftermath. Home values in Massachusetts and across the nation declined precipitously, and many homeowners found themselves suddenly “underwater” with homes worth less than the mortgage debt they owed. As part of the scheme, Polanco, Jimenez, Ricci, Bellerose and others submitted materially false and misleading documents to numerous banks in an effort to induce them to permit the short-sales, thereby releasing the purported sellers from their unpaid mortgage debts, while simultaneously inducing the purported buyers’ banks to provide financing for the deals. In fact, the purported sellers simply stayed in their homes, with their debt substantially reduced.

The conspirators falsely led banks to believe that the sales were arms-length transactions between unrelated parties; in fact, the buyers and sellers were frequently related, and the sellers retained control of (and frequently continued to live in) the properties after the sale. The conspirators also submitted phony earnings statements in support of loan applications that were submitted to banks in order to obtain new financing for the purported sales. In addition, the defendants submitted phony “HUD-1 Settlement Statements” to banks that did not accurately reflect the disbursement of funds in the transactions. (HUD-1 Settlement Statements are standard forms that are used to document the flow of funds in real estate transactions. They are required for all transactions involving federally related mortgage loans, including all mortgages insured by the Federal Housing Administration.)

United States Attorney Andrew E. Lelling; Christina Scaringi, Special Agent in Charge of the Department of Housing and Urban Development, Office of Inspector General, New York Field Office; and Christy Goldsmith Romero, Special Inspector General of the Troubled Asset Relief Program, made the announcement. Assistant U.S. Attorney Stephen E. Frank, Chief of Lelling’s Economic Crimes Unit, and Assistant U.S. Attorneys Sara Miron Bloom and Victor A. Wild, also of the Economic Crimes Unit, prosecuted the cases.

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Real Estate Attorney Sentenced for Fraudulent Short-Sale Scheme

Stephanie Abbott —  June 18, 2018 — Leave a comment

Robert Farrace, 54, Modesto, California was sentenced today to two years in prison for a fraudulent short-sale scheme.

On November 14, 2017, a jury found Farrace guilty of three counts of wire fraud in connection with the scheme. According to court documents, Farrace, an attorney specializing in real estate law and the former president of the Stanislaus County Bar Association, owned two properties in Modesto, California with substantial mortgage loans. By early 2010, Farrace was in default and received foreclosure notices for the two properties. In order to keep the properties and avoid foreclosure, Farrace formed an entity called “Dignitas LLC” to purchase the properties.

According to evidence presented at trial, Farrace controlled Dignitas, but listed a friend’s name on the paperwork as a nominal manager because he knew the bank would not sell the property to a related party. Farrace then submitted short sale offers to the bank that serviced the loans on both properties, listing Dignitas and the nominee manager as the purchaser. Farrace misrepresented his relationship to Dignitas to induce the bank to approve the short sale. Because the servicing bank did not know of the true relationship, it went forward and completed one of the short sales. The short sale on the second property was stopped after law enforcement informed the bank of Farrace’s scheme.

U.S. Attorney McGregor W. Scott made the announcement.

This case was the product of an investigation by the Federal Housing Finance Agency–Office of Inspector General, the Federal Bureau of Investigation, and the Stanislaus County District Attorney’s Office. Assistant U.S. Attorneys Michael G. Tierney and Shelley D. Weger prosecuted the case.

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Role in Sweeping Mortgage Fraud Conspiracy Gets Mortgage Loan Officer Jail Time

Stephanie Abbott —  May 24, 2018 — Leave a comment

Vanessa Ricci, 41, Methuen, Massachusetts, a mortgage loan officer, was sentenced yesterday in federal court in connection with a sweeping conspiracy to defraud banks and mortgage companies by engaging in sham “short” sales of residential properties in Merrimack Valley, Massachusetts.

Ricci was sentenced to six months in prison, three years of supervised release and ordered to pay restitution of $963,730. In March 2018, Ricci pleaded guilty to one count of conspiracy to commit bank fraud. http://www.mortgagefraudblog.com/?s=Vanessa+Ricci

Co-defendants Jasmin Polanco, 37, a real estate closing attorney, previously pleaded guilty to one count of conspiracy to commit bank fraud and is scheduled to be sentenced on June 21, 2018;  Greisy Jimenez, 50, pleaded guilty to two counts of bank fraud and one count of conspiracy to commit bank fraud and is scheduled to be sentenced on June 6, 2018; Hyacinth Bellerose, 51, a real estate closing attorney, was sentenced in March 2017 to time served and one year of supervised release to be served in home detention after pleading guilty to conspiracy to commit bank fraud.

The charges arose out of a scheme to defraud various banks via bogus short sales of homes in Haverhill, Lawrence and Methuen, Massachusetts in which the purported sellers remained in their homes, with their debt substantially reduced. A short sale is a sale of real estate for less than the value of any existing mortgage debt on the property. Short sales are an alternative to foreclosure that typically occur only with the consent of the mortgage lender. Generally, the lender absorbs a loss on the loan and releases the borrower from the unpaid balance. By their very nature, short sales are intended to be arms-length transactions in which the buyers and sellers are unrelated, and in which the sellers cede their control of the subject properties in exchange for the short-selling bank’s agreement to release them from their unpaid debt.

The conspiracy began in approximately August 2007 and continued through June 2010, a period that included the height of the financial crisis and its aftermath. Home values in Massachusetts and across the nation declined precipitously, and many homeowners found themselves suddenly “underwater” with homes worth less than the mortgage debt they owed. As part of the scheme, Jimenez, Polanco, Ricci, Bellerose and others submitted materially false and misleading documents to numerous banks in an effort to induce them to permit the short-sales, thereby releasing the purported sellers from their unpaid mortgage debts, while simultaneously inducing the purported buyers’ banks to provide financing for the deals. In fact, the purported sellers simply stayed in their homes, with their debt substantially reduced.

The conspirators falsely led banks to believe that the sales were arms-length transactions between unrelated parties; in fact, the buyers and sellers were frequently related, and the sellers retained control of (and frequently continued to live in) the properties after the sale. The conspirators also submitted phony earnings statements in support of loan applications that were submitted to banks in order to obtain new financing for the purported sales. In addition, the defendants submitted phony “HUD-1 Settlement Statements” to banks that did not accurately reflect the disbursement of funds in the transactions. (HUD-1 Settlement Statements are standard forms that are used to document the flow of funds in real estate transactions. They are required for all transactions involving federally related mortgage loans, including all mortgages insured by the Federal Housing Administration.)

United States Attorney Andrew E. Lelling; Christina Scaringi, Special Agent in Charge of the Department of Housing and Urban Development, Office of Inspector General, New York Field Office; and Christy Goldsmith Romero, Special Inspector General of the Troubled Asset Relief Program, made the announcement.  Assistant U.S. Attorney Stephen E. Frank, Chief of Lelling’s Economic Crimes Unit, and Assistant U.S. Attorneys Sara Miron Bloom and Victor A. Wild, also of the Economic Crimes Unit, prosecuted the cases.

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Sentencing in Bank Fraud Scheme

Stephanie Abbott —  April 24, 2018 — Leave a comment

Mark Migdal, 72, Portola Valley, California, was sentenced today for conspiracy to commit bank fraud and providing false statements to banks in connection with short sale and loan modification requests.

According to his guilty plea, between June 2009 and April 2016, Migdal, conspired to defraud two federally-insured banks, now Bank of America and EverBank.  Migdal admitted the conspirators sought the banks’ approval for a short sale of two condominiums owned by Migdal in Kihei, Maui.  Midgal conspired to convince the banks to allow the properties to be sold in short sales to an individual who was, in reality, deceased.  A short sale is a sale in which a lender allows a property to be sold at a price that is less than the amount owed on the loan.  Thereafter, Migdal controlled and rented the properties using the deceased person’s identity, and later transferred the properties back to himself. Migdal further admitted that, between June 2009 and January 2010, he provided false statements to another federally-insured bank, JP Morgan Chase Bank, in an attempt to obtain mortgage modifications on his residence in Portola Valley, California, and a condominium owned by him in Mountain View, California.

On April 27, 2017, a federal grand jury issued a superseding indictment charging Migdal with one count of conspiracy to commit bank fraud, in violation of 18 U.S. C. § 1349; two counts of bank fraud, in violation of 18 U.S.C. § 1344(1) and (2); one count of aggravated identity theft, in violation of 18 U.S.C. § 1028A; and two counts of making false statements to a federally insured institution, in violation of 18 U.S.C. § 1014.  Pursuant to his guilty plea, Migdal pleaded guilty to the conspiracy count, and the two counts of making false statements to a federally insured institution.  The remaining counts were dismissed. http://www.mortgagefraudblog.com/?s=Mark+Migdal

In addition to the term of imprisonment, Honorable Vince Chhabria, U.S. District Judge ordered Migdal to serve three years of supervised release and to pay restitution in the following amounts:  $239,519 to Fannie Mae, successor to the deed of trust held by EverBank; $202,491 to Bank of America; and $18,205 to JP Morgan Chase.  In addition, Migdal was also ordered to pay a $1,000,000 fine and to forfeit substitute assets totaling $539,784.98.

The announcement was made by Acting United States Attorney Alex G. Tse, Federal Bureau of Investigation Special Agent in Charge John F. Bennett, and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf.

The case is being prosecuted by Assistant United States Attorneys Colin Sampson and Erin Cornell.  The prosecution is the result of an investigation by the Federal Bureau of Investigation and Internal Revenue Service, Criminal Investigation.

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Former Atlantic County Prosecutor’s Office Detective Sentenced For Mortgage Fraud Conspiracy

Stephanie Abbott —  April 5, 2018 — Leave a comment

Betsy Borges, 38, Mays Landing, New Jersey who admitted her role in a more than $200,000 mortgage fraud conspiracy involving a property she purchased in Mays Landing, New Jersey, was sentenced today to 18 months in prison.

Borges was originally charged by complaint in May 2017 with Iraida Fuentes, 35, Pleasantville, New Jersey.

According to documents filed in this case and statements made in court:

In December 2002, Borges purchased a property in Mays Landing, New Jersey. Despite failing to make mortgage payments to Wachovia and its successor, Wells Fargo, Borges collected rental income from tenants living in the property and concealed that income from the banks. Borges also falsely represented to Wells Fargo, on multiple occasions, that she could not make the mortgage payments for the property.

Borges subsequently arranged with Wells Fargo for Fuentes to purchase the property through a short sale. Not only did Borges and Fuentes conceal their familial relationship from Wells Fargo, they also concealed the fact that Borges and another conspirator provided Fuentes the funds to purchase the property.

On September 20, 2012, Fuentes purchased the property at a price well below its actual value. On November 22, 2016, B&B Properties, a company owned in part by Borges, purchased the property from Fuentes for $25,000. On February 3, 2017, Borges then individually purchased the property from B&B Properties for one dollar.

Borges previously pleaded guilty before U.S. District Judge Jerome B. Simandle to information charging her with one count of conspiracy to commit bank fraud. Judge Simandle imposed the sentence in Camden federal court.

In addition to the prison term, Judge Simandle sentenced Borges to three years of supervised release and ordered her to pay restitution of $206,405.

Fuentes pleaded guilty on Nov. 6, 2017 and was sentenced Feb. 9, 2018 to two years of probation.

U.S. Attorney Craig Carpenito made the announcement.

U.S. Attorney Carpenito credited agents of the FBI’s Atlantic City Resident Agency, under the direction of Acting Special Agent in Charge Bradley W. Cohen in Newark, with the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorney Jacqueline M. Carle of the U.S. Attorney’s Office Criminal Division in Camden.

Defense counsel: Louis M. Barbone Esq., Atlantic City, New Jersey.

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Man Pleads Guilty in “Foreclosure Rescue Scheme”

Stephanie Abbott —  April 4, 2018 — Leave a comment

Mark Demetri Stein, 38, Carrollton, Texas, appeared in federal court this morning and pleaded guilty to one count of mail fraud.

A federal grand jury in Dallas returned an indictment in December 2016 charging Stein and three others with felony offenses stemming from a “foreclosure rescue scheme” they ran from approximately February 2012 through January 2013. http://www.mortgagefraudblog.com/?s=Mark+Demetri+Stein  Bruce Kevin Hawkins, 52, Desoto, Texas, Richard Bruce Stevens, 51, San Antonio, Texas, and Christina Renee Caveny, 37, Dallas, Texas have pleaded guilty to their roles in the scheme. Hawkins and Caveny have been sentenced to 41 months and 15 months in federal prison, respectively. Stevens is scheduled to be sentenced before U.S. District Judge David C. Godbey on May 7, 2018.

According to documents filed in the case, Stein operated Real Estate Solutions, Stevens used Texas Real Estate Services, and Hawkins formed ERealty Mortgage Group, LLC, as foreclosure rescue companies.  The conspirators used third parties to contact homeowners and offer them an opportunity to get out of their present home loans and receive a new home loan with a reduced interest payment and reduced monthly payment.  Hawkins and other conspirators falsely represented to homeowners that they had “investors” standing by who were ready to quickly purchase the homeowner’s present loan from the lender holding the current mortgage.  They also falsely represented that they would use investors to purchase the homeowner’s loan from the original lender at a greatly reduced price through a “short sale” process.

Furthermore, Hawkins and other conspirators falsely represented to the homeowners that the homeowners had the legal authority to transfer their homeowner’s deed to the defendants.

As part of the scheme, the conspirators fraudulently required homeowners to start making all future loan payments to them based on fraudulent so-called “loans,” and they also told homeowners to ignore late payment notices sent by lenders.  As part of the scheme, the conspirators conducted a fraudulent “closing” for each homeowner where they caused the homeowner to pay them a large down payment on the new “loan,” and they also had the homeowner sign fraudulent documents, such as a promissory note, deed of trust, special warranty deed, and/or a so-called “land trust.”

Further, according to plea documents, the conspirators falsely represented to homeowners that the conspirators could “sell” their property back to the homeowner with a new loan, when the conspirators well knew they did not legally own the property.  The conspirators also told homeowners to ignore notices of nonpayment from their present lender as they continued to unlawfully collect monthly so called “mortgage payments” from homeowners.  In fact, conspirators instructed several homeowners to file for bankruptcy but to not follow up with the bankruptcy process as an additional means to delay foreclosure and conceal the conspirators’ criminal conduct.  Conspirators concealed that all down payment and monthly mortgage payments fraudulently collected from homeowners was spent for their own personal benefit.

The defendants recruited at least 70 distressed and vulnerable homeowners who were facing the imminent threat of foreclosure on their homes and fraudulently collected a total of at least $242,000 from them.

Stein faces a maximum statutory penalty of twenty years in federal prison and a $250,000 fine.  Restitution could also be ordered.  Stein will remain on bond pending sentencing which will be set at a later date.

U.S. Attorney Erin Nealy Cox of the Northern District of Texas made the announcement.

This case is one of many felony indictments of bankruptcy-related crimes prosecuted as part of the Bankruptcy Fraud Initiative, United States Attorney’s Office, Northern District of Texas.  These bankruptcy prosecutions were a part of a larger number of criminal referrals regularly made to this office by the United States Trustee’s Office, Dallas, Texas.  Since 2013, these focused prosecutions have resulted in 25 convictions of individuals engaged in various types of fraudulent conduct within the United States Bankruptcy Courts.

The Dallas FBI investigated the case.  Assistant U.S. Attorney David Jarvis is in charge of the prosecution.

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Bank Fraud Gets Husband and Wife Sentenced to Prison

Stephanie Abbott —  March 30, 2018 — Leave a comment

Joseph Atias, 54, Great Neck, New York was sentenced to 40 months’ imprisonment and his wife Sofia Atias, 48, Great Neck, New York was sentenced to 8 months’ imprisonment, following their March 30, 2017 trial convictions for bank fraud and conspiracy to commit bank fraud in connection with the sale of their real property to Sacred Heart Academy, Hempstead, New York for athletic fields. They were also convicted of Medicaid fraud.

The Bank Fraud Scheme

At trial, the government’s evidence established that shortly before the sale of their property adjacent to Sacred Heart Academy for $925,000, the defendants sold the property in a short sale to Bank of America for $480,000 to discharge their mortgage debt.  In negotiating the short sale with the bank, the defendants and their co-conspirator attorney concealed Sacred Heart Academy’s pending offer and submitted a fraudulent contract of sale and other false documents representing that they did not have funds to pay off the mortgages in full.  As part of the fraudulent short sale, the defendants used a relative as a “straw buyer” of the property to create the appearance of an arms-length sale.  Shortly after that sale, the defendant’s straw buyer sold the property to Sacred Heart Academy for approximately half a million dollars in profit.

The Medicaid Fraud Scheme

The government’s evidence at trial established that between 2009 and 2015 the defendants fraudulently obtained Medicaid funds, by concealing their self-employment income and available cash resources, including trust fund monies and the $465,000 in proceeds from the bank fraud scheme.

As part of their sentences, United States District Judge Denis R. Hurley ordered the defendants to pay $465,965 in forfeiture and $49,956 in restitution.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the sentence.

“Joseph and Sofia Atias committed fraud schemes to try to get out from under mortgage debt and to fraudulently obtain Medicaid funds, essentially flaunting the laws to which we all must adhere,” stated United States Attorney Donoghue.  “This Office and our law enforcement partners will make every effort to ensure that those who would manipulate the system are called to account.”

“In a clear case of double dipping, the defendants convinced the lending institution of their eligibility to qualify for a short sale on their property, recruited a relative to serve as a straw buyer for the property, and profited from the funds of a subsequent sale of the property,” stated FBI Assistant Director-in-Charge Sweeney.  “At the same time they were running this scheme, they were also found to have engaged in significant fraud against the government. May today’s sentencing remind those who exploit government programs and manipulate gaps in the mortgage and banking sectors that they will face the error of their ways.”

The government’s case is being handled by the Office’s Long Island Criminal Division.  Assistant United States Attorneys Charles P. Kelly and Burton T. Ryan, Jr., are in charge of the prosecution.  Assistant United States Attorney Madeline O’Connor of the Office’s Civil Division is handling matters related to forfeiture.

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Real Estate Agent Convicted of Short Sale Fraud Scheme

Stephanie Abbott —  February 12, 2018 — Leave a comment

James Thornton, Arizona, a real estate agent, was found guilty of Fraudulent Schemes and Theft after defrauding two banks in a short sale home scam.

In 2012, Thornton was the listing real estate agent for the owner of a home who was in default on both mortgages in Mesa, Arizona. Thornton sold the property via short sale to his parents’ LLC for $580,000. There had been other offers to purchase the home for hundreds of thousands of dollars more, including offers for $870,000, $707,000, and $650,000. Both banks approved the short sale price to Thornton’s parents not knowing about any of the other offers to purchase the property for significantly more.

Four days after Thornton’s parents purchased the home, Thornton became their listing agent and tried to sell the home “off the market” for $1,100,000. Thornton eventually sold the home to a third party for $1,050,000 cash approximately two months later. Thornton’s parents earned $540,722 in profit on the sale for $1,050,000, only having owned the home for two months.

In the course of his fraud scheme, Thornton made false statements and misrepresentations to bank representatives, potential buyers, and other real estate agents. To discourage buyers on the short sale and devalue the home, Thornton misrepresented the true number of rooms and bathrooms in the home, pointed out a code violation that didn’t exist to an appraiser, and removed all of the high end, custom appliances from the home. Thornton also falsely told the $1,050,000 cash buyer that the reason there was a substantial gap between his parents’ purchase price of $580,000 and the new list price of $1,100,000 was because there had been a “lien paid outside of escrow.”

Sentencing is set for March 16, 2018. Thornton faces 3 to 12.5 years in prison.

Attorney General Mark Brnovich made the announcement.

The FBI Phoenix Field Office investigated this case.

Assistant Attorney General Maura Quigley and Scott Blake prosecuted this case.

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Short Sale Fraud Indictment Alleging Non-Arms Length Transaction

Rachel Dollar —  January 16, 2018 — 1 Comment

Gary P. DeCicco, 59, Nahant, Massachusetts, and Pamela M. Avedisian, 54, Nahant, Massachusetts, were charged in an indictment with one count of conspiracy to commit wire fraud and one count of wire fraud in connection with the “short sale” of a house in Nahant, Massachusetts. DeCicco was also charged with one count of conspiracy to commit bank fraud, one count of bank fraud, four counts of wire fraud and attempted wire fraud, and six counts of engaging in unlawful monetary transactions.

DeCicco has been in federal custody since he was charged in March 2017 with attempted extortion in connection with arranging and paying for a local business owner to be assaulted. DeCicco and Avedisian made an initial appearance in federal court in Boston and will be arraigned on Tuesday, January 16, 2018.

The indictment alleges that Avedisian owned a property in Nahant that was subject to a mortgage in excess of $1 million.  In October 2015, DeCicco and Avedisian allegedly conspired to defraud the mortgage holder by proposing the sale of the property for significantly less than the outstanding mortgage, in what is commonly referred to as a “short sale.”  By their very nature, short sales are intended to be arms-length transactions in which the buyers and sellers are unrelated and act independently, allowing sellers to cede their ownership of the property in exchange for the short-selling bank’s agreement to release them from their unpaid mortgage debt.  In order to get approval for the sale, DeCicco and Avedisian concealed their long-term romantic and business relationships from the loan servicing company and falsely represented that Avedisian could no longer make payments towards the mortgage on the property.  In fact, just two months before the “short sale” closed, Avedisian purportedly received $3.5 million from the sale of another asset to DeCicco.

The indictment also alleges that from November 2015 to September 2016, DeCicco and a co-conspirator falsified rent rolls and prepared fake leases, which they then provided to financial institutions in support of their applications for a $5.5 million loan secured by a commercial building in Peabody.  The indictment further alleges that between September 2016 and January 2017, DeCicco committed unlawful monetary transactions with the proceeds of the bank fraud scheme, and between February and December 2016, DeCicco engaged in a scheme to defraud multiple insurance companies using fake invoices and other documents to support his claims.

The charges of wire fraud and conspiracy, as well as bank fraud and conspiracy, provides for a sentence of no greater than 30 years in prison, three years of supervised release and a fine of $250,000.  The charges of wire fraud and attempted 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.  The charge of engaging in 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.

United States Attorney Andrew E. Lelling; Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; and Joel P. Garland, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston, made the announcement today.  Assistant U.S. Attorney Kristina E. Barclay of Lelling’s Public Corruption and Special Prosecutions Unit is prosecuting the case.

 

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