R. Alexander Acosta, United States Attorney for the Southern District of Florida, and Jonathan I. Solomon, Special Agent in Charge, Federal Bureau of Investigation, announced that defendant Jose G. Martin was sentenced today by U.S. District Court Judge Marcia Cooke to sixty five months in federal prison, to be followed by three years of supervised release. Judge Cooke also ordered a restitution hearing to determine the identity of the victims to be paid by Martin in connection with the $3,198,278 in restitution for losses that resulted from Martin’s participation in a mortgage fraud scheme.

Defendant Jose G. Martin was arrested in January 2009 for facilitating the fraudulent sale of seven residential properties through straw buyers. The scheme resulted in more than $6.6 million in fraudulent loans. Defendant Martin personally received more than $1 million in gross proceeds from this scheme. The defendant pled guilty on April 1, 2009, to one count of conspiracy to commit wire fraud, in violation of 18 U.S.C. §1349, and one count of wire fraud, in violation of 18 U.S.C. §1343.

To effectuate the scheme, at the closings, defendant Martin submitted fraudulent invoices for construction work on these residential properties, and received hundreds of thousands of dollars as payment for construction work that was never performed. Defendant Martin then used these proceeds to pay the straw buyers and other co-conspirators, and kept a portion of the money for himself. After the closings, defendant Martin and the straw buyers failed to make payments on the mortgages to the victim lenders, and the properties went into foreclosure.

In one example of this scheme, defendant Martin repeatedly flipped a property on Alesio Avenue in Coral Gables, FL. The Coral Gables property was flipped three times within approximately two years, more than doubling the price of the property from $550,000 to $1,200,000. In the course of these flips of the Coral Gables property, Martin diverted to himself approximately $450,000 for construction work purportedly performed on this property. In addition, Martin paid off three straw buyers of this property, none of whom ever intended to live in the property or make payments on the mortgages. Ultimately, the Coral Gables property went into foreclosure, resulting in significant losses to the lender.

This case was investigated by agencies participating in the Federal-State Mortgage Fraud Strike Force. Mr. Acosta commends the investigative efforts of the Mortgage Fraud Strike Force, with particular commendation to the Federal Bureau of Investigation. The case was prosecuted by Assistant U.S. Attorney Peter A. Forand.

A copy of this press release may be found on the website of the United States Attorney’s Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

JACKSONVILLE, FL—United States Attorney A. Brian Albritton announces that U.S. District Judge Henry Lee Adams, Jr. yesterday sentenced Barry C. Westergom (age 60, of Jacksonville) to four years in federal prison for conspiracy to commit wire and bank fraud. The court also ordered restitution in the amount of $866,141.62 and entered a money judgment for $100,000, the amount that Westergom had obtained from the fraud. Westergom had pleaded guilty on October 8, 2009.

According to court documents, during 2004 and 2005, Westergom’s co-conspirator, Juan Carlos Gonzalez, contracted to purchase about 55 houses. Gonzalez retained Westergom, who was a licensed real estate appraiser, to appraise most of the properties. Westergom then fraudulently inflated the appraisals, valuing each property at a significantly higher price than the negotiated purchase price. Westergom knew that Gonzalez intended to submit the appraisals to lenders in support of mortgage loan applications in which the inflated appraisal value was listed as the purchase price. The lender was not informed that the price listed in the transaction documents was higher than the actual price negotiated with the seller. Gonzalez also submitted fraudulent financial documents and information, including altered bank statements and payroll records, to the lenders in support of the loan applications.

At each closing, Gonzalez received the difference between the loan amount, which was based on the inflated appraisal, and the actual purchase price, and Westergom received commissions and fees.

Westergom’s plea agreement details one transaction in which Westergom, acting as a buyer’s agent for Gonzalez, negotiated with a seller to purchase a house for $490,000. Westergom then fraudulently appraised the house for $625,000. Gonzalez submitted first and second mortgage loan applications for the house reflecting a sales price of $625,000. Gonzalez also submitted altered bank account statements showing significantly larger cash balances in the account than actually existed. The lender approved the loans and, at the closing, Gonzalez received $134,000, which was listed on closing documents as an “Assignment of Contract Fee.” Westergom received $12,250 as a broker’s fee and $550 as an appraisal fee.

The conspirators’ fraudulent acts resulted in lenders extending more than $29,272,000 in first and second mortgage loans. Westergom received a total of about $100,000 in commissions and fees. Gonzalez received $6,296,303.65 from the scheme.

Gonzalez pleaded guilty to a conspiracy charge and was sentenced to seven years in federal prison on November 5, 2009.

The case was investigated by the Federal Bureau of Investigation and was prosecuted by Assistant United States Attorney Arnold B. Corsmeier. It was brought as part of the Middle District of Florida’s Mortgage Fraud Surge, a joint effort by the U.S. Attorney’s Office for the Middle District of Florida, the Federal Bureau of Investigation, Tampa and Jacksonville Divisions, and numerous other federal, state, and local law enforcement agencies. The Surge focused intensive investigative and prosecutorial resources on the mortgage fraud crisis that plagues middle Florida and has contributed to the current economic situation nationwide. The Surge accelerated mortgage fraud cases to bring perpetrators to justice quickly and provide maximum deterrence, and it was the first step in an ongoing effort to prosecute mortgage fraud of all types throughout the Middle District. For more information on the Middle District of Florida’s Mortgage Fraud Surge, please contact Steve Cole, Public Affairs Officer for the United States Attorney’s Office.

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Henry Gutierrez, Postal Inspector in Charge, U.S. Postal Inspection Service, John V. Gillies, Special Agent in Charge, Federal Bureau of Investigation, Miami Field Office, and J. Thomas Cardwell, Commissioner, State of Florida’s Office of Financial Regulation, announced that defendants Monique Mitchell, 29, of Pembroke Pines, and Sheldon Martin, 34, of Plantation, pled guilty this morning in West Palm Beach federal court to one count of making false statements on a HUD-1 Real Estate Settlement Form in connection with a mortgage fraud scheme. Sentencing has been scheduled for July 21, 2010 before U.S. District Judge Donald Middlebrooks.

According to records filed with the court and statements made during the plea hearing, defendant Monique Mitchell was employed by Attorneys Title Center, in Pembroke Pines. Defendant Sheldon Martin was a self-employed licensed mortgage broker in Plantation. At the plea, Mitchell and Martin admitted that they knowingly prepared a false HUD-1 Settlement Statement Form in connection with the January 2008 sale of a $1,250,000 home in Fort Lauderdale. The HUD-1 Form included false information to Regions Bank, the lender, about the down payment, the cash on hand at closing, and the amount repaid to the previous lender. In addition, the defendants concealed from Regions Bank money paid to The Pines Law Center at the closing.

At sentencing, the defendants face a maximum statutory sentence of up to five years in prison. Co-defendant, attorney Michael Samuda, is scheduled for trial in June 2010.

“This is a wake-up call to those in the mortgage industry who think they can get away with mortgage fraud,” said Special Agent in Charge John V. Gillies of the FBI’s Miami Division. “Submitting false information on loan documents is a crime and the FBI and its partners will investigate and prosecute those that break the law.”

Mr. Ferrer commended the investigative efforts of the U.S. Postal Inspection Service, FBI, and State of Florida’s Office of Financial Regulation. This case is being prosecuted by Assistant U.S. Attorney Jeffrey Kay.

A copy of this press release may be found on the website of the United States Attorney’s Office for the Southern District of Florida at www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the United States District Court for the Southern District of Florida at www.flsd.uscourts.gov or http://pacer.flsd.uscourts.gov.

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida; John V. Gillies, Special Agent in Charge, Federal Bureau of Investigation, Miami Field Office; Henry Gutierrez, Postal Inspector in Charge, U.S. Postal Inspection Service; J. Thomas Cardwell, Commissioner, State of Florida’s Office of Financial Regulations; Amos Rojas, Jr., Special Agent in charge, Florida Department of Law Enforcement; and Alex Sink, Chief Financial Officer, State of Florida’s Office of Financial Services, announce fraud charges against a defendant Marie Decosta Quintana, 40, of North Miami, Florida, as a result of an investigation led by the Palm Beach County Mortgage Fraud Task Force. The defendant was arrested Tuesday, June 29, 2010, and made her initial appearance in West Palm Beach this morning.

The two-count indictment charges defendant Quintana with making false statements on loan applications to Bank of America and National City Bank, to purchase property in the Versailles Development at 10475 Trianon Place, Lake Worth, Florida, in 2007. According to the indictment, Quintana lied about her employment, income, assets and intention to live in the house to persuade the banks to provide money through two separate mortgages to buy the home. Quintana was recruited to be the straw purchaser of the home and received payment for allowing the use of her name, credit score and for signing documents containing false information. The fraud scheme resulted in more than $1.1 million in losses to two banks.

The charges announced today are the result of the investigative efforts of the multi-agency Palm Beach Mortgage Fraud Strike Force. Mr. Ferrer commended the investigative efforts of the FBI, the State of Florida’s Office of Financial Regulation, the U.S. Postal Inspection Service, FDLE and Florida’s Office of Financial Services. The case is being prosecuted by Assistant U.S. Attorney Ellen Cohen.

An indictment is merely an accusation and a defendant is presumed innocent unless and until proven guilty.

A copy of this press release may be found on the website of the United States Attorney’s Office for the Southern District of Florida at www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the United States District Court for the Southern District of Florida at www.flsd.uscourts.gov or http://pacer.flsd.uscourts.gov.

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida; John V. Gillies, Special Agent in Charge, Federal Bureau of Investigation, Miami Field Office; Henry Gutierrez, Postal Inspector in Charge, U.S. Postal Inspection Service; J. Thomas Cardwell, Commissioner, State of Florida’s Office of Financial Regulations; Amos Rojas, Jr., Special Agent in charge, Florida Department of Law Enforcement; and Alex Sink, Chief Financial Officer, State of Florida’s Office of Financial Services, announce fraud charges against a defendant Marie Decosta Quintana, 40, of North Miami, Florida, as a result of an investigation led by the Palm Beach County Mortgage Fraud Task Force. The defendant was arrested Tuesday, June 29, 2010, and made her initial appearance in West Palm Beach this morning.

The two-count indictment charges defendant Quintana with making false statements on loan applications to Bank of America and National City Bank, to purchase property in the Versailles Development at 10475 Trianon Place, Lake Worth, Florida, in 2007. According to the indictment, Quintana lied about her employment, income, assets and intention to live in the house to persuade the banks to provide money through two separate mortgages to buy the home. Quintana was recruited to be the straw purchaser of the home and received payment for allowing the use of her name, credit score and for signing documents containing false information. The fraud scheme resulted in more than $1.1 million in losses to two banks.

The charges announced today are the result of the investigative efforts of the multi-agency Palm Beach Mortgage Fraud Strike Force. Mr. Ferrer commended the investigative efforts of the FBI, the State of Florida’s Office of Financial Regulation, the U.S. Postal Inspection Service, FDLE and Florida’s Office of Financial Services. The case is being prosecuted by Assistant U.S. Attorney Ellen Cohen.

An indictment is merely an accusation and a defendant is presumed innocent unless and until proven guilty.

A copy of this press release may be found on the website of the United States Attorney’s Office for the Southern District of Florida at www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the United States District Court for the Southern District of Florida at www.flsd.uscourts.gov or http://pacer.flsd.uscourts.gov.

TAMPA—United States Attorney Robert E. O’Neill announces the return by a grand jury of an indictment charging Diogenes Aguasvivas (age 38, of Tampa) with two counts of wire fraud. If convicted, Aguasvivas faces a maximum penalty of 20 years in federal prison on each count.

According to the indictment, Aguasvivas participated in a mortgage fraud scheme in complicity with a purported financial services company, 4Solutions, Inc. The scheme to defraud involved Aguasvivas applying for mortgage loans and entering into undisclosed inside side agreements that relieved him of his obligation to make mortgage loan payments.

The indictment alleges that Aguasvivas received incentive payments of $5,000 for each mortgage loan he obtained and concealed those payments and other material information from the mortgage lenders. Aguasvivas allegedly made other false and fraudulent representations to the lenders, including with respect to the source of his equity contributions, his assets, and his liabilities.

This case was investigated by the Federal Bureau of Investigation. It is being prosecuted by Assistant United States Attorney Robert Monk.

An indictment is merely a formal charge that a defendant has committed a violation of the federal criminal laws, and every defendant is presumed innocent unless, and until, proven guilty.

United States Attorney Laura E. Duffy announced today the sentencing of four defendants who were convicted in connection with a $55 million mortgage fraud scheme. The four defendants, Maria Echeverria, Ivan Gil, Laneka Chatton, and Jonathan J. Garcia, are among 19 defendants named in a 51-count indictment that alleges wire fraud, mail fraud, and criminal forfeiture.

As alleged in the indictment, from about 2004 to about 2007, each of the defendants made false statements in various loan applications and supporting documents in order to trick lenders into giving residential mortgage loans to unqualified or under-qualified borrowers. Among other things, the defendants falsified borrowers’ income and employment to make them appear as if they would represent a good investment candidate for the lender. Defendants also misled the lenders by purchasing false “CPA letters” from Aguilera Bookkeeping and Income Tax, which was located in Vista, California. These false CPA letters purported to verify that the borrower was successfully self-employed. It is alleged that the defendants fraudulently induced banks and lending institutions to make over $55 million in home loans, and received over $1.05 million in fees and commissions.

In handing down sentences, United States District Court Judge Jeffrey T. Miller remarked upon the seriousness of the crimes in this case and the need to both punish defendants for their criminal conduct and to afford adequate deterrence for others who might engage in mortgage fraud. Judge Miller then imposed custodial sentences upon all four defendants. He imposed a sentence of 18 months for Jonathan J. Garcia. Garcia previously pled guilty to one count of a making false statements to a federally insured institution, in violation of Title 18, United States Code, Section 1014. Garcia and co-defendants Laneka Chatton, Karen Garcia, and Francisco Giron worked at Giron’s Financial & Realty Group in Oceanside, California. Jonathan Garcia was involved in 32 fraudulent loan applications, representing approximately $7 million in fraudulent loans, and which resulted in losses of between $400,000 and $1 million when the borrowers defaulted, the loans were foreclosed, and the properties were sold.

Judge Miller also imposed a sentence of 12 months and one day for Maria Echeverria. Echeverria pled guilty to two counts of wire fraud in violation of Title 18, United States Code, Section 1343. Echeverria owned a mortgage company called AmStar Funding in Vista, California. Echeverria admitted that she engaged in fraud in at least nine loan applications, representing approximately $3 million in fraudulent loans, and which resulted in losses of at least $526,000 when the borrowers defaulted, the loans were foreclosed, and the properties were sold.

Judge Miller imposed a sentence of 12 months upon Ivan Gil. Gil previously pled guilty to four counts of making false statements to a federally insured institution. Gil worked at Dream Homes and Loans, a mortgage and real estate company in Vista, California. Gil admitted that he engaged in fraud in at least 12 loan applications, representing approximately $2.2 million in fraudulent loans, and which resulted in losses of $200,000 to $400,000 when the borrowers defaulted, the loans were foreclosed, and the properties were sold.

Judge Miller imposed a sentence of 12 months upon Laneka Chatton. Chatton previously pled guilty to one count of wire fraud in violation of Title 18, United States Code, Section 1343. Chatton also worked at Giron’s Financial & Realty Group in Oceanside, California. Chatton admitted that she engaged in fraud in at least four loan applications, representing approximately $800,000 in fraudulent loans, which resulted in losses of approximately $130,000 when the borrowers defaulted, the loans were foreclosed, and the properties were sold.

United States Attorney Laura E. Duffy said, “Mortgage fraud like that perpetrated by these defendants contributed significantly to the collapse of the real estate market throughout this country. The punishment delivered today will help ensure that unethical loan officers, and society in general, realize that this type of behavior has tremendous consequences and will be seriously punished.”

This investigation was conducted by agents of the Federal Bureau of Investigation.
DEFENDANT CONVICTION(S) Case Number: 10cr2242-JM
Maria Echeverria Counts 22 & 47 – Wire Fraud
(Title 18, United States Code, Section1343)
Ivan Gil Counts 1-4, Superseding Information – False Statement to
Federally Insured Institution
(Title 18, United States Code, Section 1014)
Jonathan J. Garcia Count 1, Superseding Information – False statement to Federally
Insured Institution (Title 18, United States Code, Section 1014)
Laneka Chatton Count 25, Wire Fraud
(Title 18, United States Code, Section1343)

AGENCY
Federal Bureau of Investigation

Nora R. Dannehy, Acting United States Attorney for the District of Connecticut, announced that WILLIAM ATHAN, 63, of Shelton, Connecticut and Naples, Florida, waived his right to indictment and pleaded guilty today before United States District Judge Vanessa L. Bryant in Hartford to one count of conspiracy to commit mail fraud and wire fraud related to a $3.6 million mortgage fraud scheme.

According to documents filed with the Court and statements made in court, ATHAN, Jose Guzman and Brian Guimond, and others participated in the operation of a real estate and mortgage fraud scheme that arranged for individuals to purchase properties and fund mortgages of houses located Connecticut. As part of the scheme, ATHAN, Guzman and another individual created a New London-based Real Estate Investment Company, which was engaged in both the business of buying and selling real estate properties, and the mortgage origination business.

Through this scheme, the co-conspirators arranged for and assisted in arranging for various individuals, or “borrowers,” to obtain funding from various mortgage companies and mortgage originators, or “lenders.” The co-conspirators arranged for numerous persons to purchase residential real estate properties, and secured the funding for the mortgages for the properties from various lenders. The borrowers usually were individuals who had good credit but were of modest means with low levels of income. The co-conspirators located real estate properties, specifically residential housing properties located in New London County, to be purchased by the borrowers using the funds loaned from various lenders. In order to recruit and entice the individuals to act as the borrowers, the co-conspirators, at times, compensated the borrowers. In order to secure the funding from lenders, the co-conspirators falsified material information on the borrowers’ mortgage loan applications, including information regarding income, assets, employment, rent history, as well as the borrowers’ intention to make the properties their primary residence.

ATHAN, who had access to an individual with a real estate license and who operated a real estate business, secured property listings for the properties that the co-conspirators wanted to sell, and eventually sold to the borrowers using the funds from the fraudulently obtained mortgages, and then shared in the real estate commissions collected on the sale of those properties.

On certain transactions, including transactions on which ATHAN served as the borrower, ATHAN, Guzman and others falsified closing records, including false work invoices from The Cutting Edge, a home improvement contractor and landscaping company controlled by Guimond, and caused checks to be issued at the closing made payable to The Cutting Edge from funds provided by the lenders. The checks were payment for work that purportedly was performed on properties prior to the closing, but which had not been performed as represented. The checks were then converted to cashiers’ checks, which were used during the closing as down payments from the borrower. Through this scheme, the co-conspirators collected large commissions and fees, and a portion of the funds advanced by the lenders, which were intended to be used to finance the purchase of the properties, were in fact used for the benefit of the co-conspirators and their various companies.

More than 200 fraudulent mortgages were funded during the period of the conspiracy. As a result of defaults on the mortgages, the lenders suffered losses of more than $3.6 million.

Judge Bryant has scheduled sentencing for May 21, 2009, at which time ATHAN faces a maximum term of imprisonment of 20 years and a fine of up to approximately $7.2 million.

Guzman and Guimond have pleaded guilty to charges related to their participation in this scheme and await sentencing.

Acting U.S. Attorney Dannehy stated the investigation is ongoing.

This case is being investigated by the Federal Bureau of Investigation, with the assistance of the U.S. Department of Housing and Urban Development and the Waterford Police Department. The case is being prosecuted by Assistant United States Attorney Michael S. McGarry.

Nora R. Dannehy, Acting United States Attorney for the District of Connecticut, today announced that a federal grand jury sitting in Hartford has returned a nine-count Indictment charging GEORGE HAJATI, also known as Gjergji Hajati, 30, of Westerly Terrace, Rocky Hill, and JUSTIN WILLIAMS, 31, of Newington, with conspiracy and wire fraud offenses stemming from an alleged Hartford-area mortgage fraud scheme.

The Indictment was returned on February 11, 2009. Following his recent extradition from Albania, HAJATI appeared today before United States Magistrate Judge William I. Garfinkel in Bridgeport and entered a plea of not guilty to the charges against him.

The Indictment alleges that, between September 2003 and November 2007, HAJATI, using his company Connecticut Partners Mortgage (“CPM”), conspired with WILLIAMS, a CPM employee, and Douglas Sheehan, 38, an attorney, and others to deceive mortgage lending financial institutions into providing falsely inflated mortgage loans to real estate buyers for the purchase of property that was worth less than the amount of the loans. The Indictment alleges that CPM provided fraudulent financial statements to the lending institutions that inflated the sales prices of the properties, the down payments made by purchasers and the amount due to sellers, as well as other fraudulent information, in order to induce the institutions to provide the funds.

Acting U.S. Attorney Dannehy stated that the investigation is ongoing and, at this time, it is believed that the various lenders have suffered a loss of more than $1 million due to this alleged mortgage scheme.

According to documents filed with the Court and statements made in court, on November 14, 2007, Federal Bureau of Investigation agents conducted a court-authorized search of Connecticut Partners Mortgage on Weston Street in Hartford. On November 21, 2007, HAJATI fled the United States to Albania. In January 2008, HAJATI met WILLIAMS in Australia. In May 2008, the co-defendants traveled to Albania, where HAJATI lived until he was 17 years old, has relatives, and is fluent in the language.

On March 17, 2009, approximately one month after HAJATI and WILLIAMS were indicted by a grand jury in Hartford, HAJATI was arrested by Albanian authorities after he attempted to cross the border of Albania and Montenegro. He was extradited to the United States on July 24.

HAJATI and WILLIAMS are charged with one count of conspiracy to commit wire fraud and eight counts of wire fraud. Each charge carries a maximum term of imprisonment of 30 years and a fine of up to $1 million.

Following his arraignment today, HAJATI was released under electronic monitoring after posting a bond in the amount of $250,000, cosigned by family members and partially secured by property.

WILLIAMS was arraigned on March 31 following his voluntary return from Albania. He is released on a non-surety bond in the amount of $25,000.

On November 20, 2008, Sheehan waived his right to indictment and pleaded guilty before United States District Judge Mark R. Kravitz in New Haven to one count of conspiracy to commit wire fraud and four counts of wire fraud. He awaits sentencing.

Acting U.S. Attorney Dannehy stressed that an indictment is only a charge and is not evidence of guilt. The defendant is entitled to a fair trial at which it is the Government’s burden to prove guilt beyond a reasonable doubt.

This case is being investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Paul H. McConnell.

David B. Fein, United States for the District of Connecticut, announced that JOHN JACKSON, 42, of Middletown, pleaded guilty today before United States District Judge Christopher F. Droney in Hartford to a one count of conspiring to commit wire fraud stemming from a mortgage fraud scheme.

According to court documents and statements made in court, in 2006, JACKSON conspired with a New Haven-based real estate attorney and an East Hartford-based mortgage broker to defraud Mortgage Lender Network USA, Inc., a Florida corporation with offices in Middletown, through the purchase of Meriden residential property. Working with the attorney and mortgage broker, JACKSON signed a loan application provided by the mortgage broker for a loan in the amount of $280,000. Both JACKSON and the mortgage broker knew that application contained several material misrepresentations, including JACKSON’s true financial condition. The application also falsely represented the purchase price of the property, which was substantially less than reflected on the loan application; that the property was to be JACKSON’s primary residence, when it was not; JACKSON’s total liabilities, which were much higher than represented on the application, and that JACKSON would provide approximately $60,000 in cash at the loan closing.

On approximately July 21, 2008, as part of the scheduled loan closing, Mortgage Lender wired approximately $283,000 into the attorney’s trust account. At the closing, JACKSON signed a HUD settlement statement, which was prepared by the attorney, that overstated the actual purchase price of the property by more than $150,000, and that stated that JACKSON had made an earnest payment toward the purchase. In fact, JACKSON had not made a payment. Instead, the attorney had made a payout to JACKSON.

Judge Droney has scheduled sentencing for October 15, 2010, at which time JACKSON faces a maximum term of imprisonment of five years and a fine of up to $250,000.

This case is being investigated by Federal Bureau of Investigation and the Connecticut State Police. The case is being prosecuted by Senior Litigation Counsel Christopher W. Schmeisser.

David B. Fein, United States for the District of Connecticut, announced that JOHN JACKSON, 42, of Hamden, was sentenced today by United States District Judge Christopher F. Droney in Hartford to six months of home confinement and two years of probation for participating in a mortgage fraud scheme. Judge Droney also ordered JACKSON to pay restitution in the amount of $100,000.

According to court documents and statements made in court, in 2006, JACKSON conspired with a New Haven-based real estate attorney and an East Hartford-based mortgage broker to defraud Mortgage Lender Network USA, Inc., a Florida corporation with offices in Middletown, through the purchase of Meriden residential property. Working with the attorney and mortgage broker, JACKSON signed a loan application provided by the mortgage broker for a loan in the amount of $280,000. Both JACKSON and the mortgage broker knew that application contained several material misrepresentations, including JACKSON’s true financial condition. The application also falsely represented the purchase price of the property, which was substantially less than reflected on the loan application; that the property was to be JACKSON’s primary residence, when it was not; JACKSON’s total liabilities, which were much higher than represented on the application, and that JACKSON would provide approximately $60,000 in cash at the loan closing.

On approximately July 21, 2006, as part of the scheduled loan closing, Mortgage Lender wired approximately $283,000 into the attorney’s trust account. At the closing, JACKSON signed a HUD settlement statement, which was prepared by the attorney, that overstated the actual purchase price of the property by more than $150,000, and that stated that JACKSON had made an earnest payment toward the purchase. In fact, JACKSON had not made a payment. Instead, the attorney had made a payout to JACKSON.

On July 29, 2010, JACKSON pleaded guilty to one count of conspiracy to commit wire fraud.

This case is being investigated by Federal Bureau of Investigation and the Connecticut State Police. The case is being prosecuted by Assistant United States Attorney Christopher W. Schmeisser.

David B. Fein, United States Attorney for the District of Connecticut, today announced that a federal grand jury sitting in New Haven has returned an indictment charging SYED A. BABAR, also known as “Ali,” 28, of Ledyard Street, New London, with one count of conspiracy to commit wire fraud and two counts of wire fraud. The charges stem from a mortgage fraud conspiracy that BABAR is alleged to have headed.

The indictment alleges that, between February 2007 and April 2010, BABAR, along with a mortgage broker, a real estate appraiser, two attorneys, and others, engaged in a scheme to obtain millions of dollars in residential real estate loans, including loans insured by the Federal Housing Administration, through the use of sham sales contracts, false loan applications and fraudulent property appraisals.

The indictment alleges that BABAR recruited and paid straw purchasers to nominally purchase homes. BABAR and his co-conspirators then directed the straw purchasers to enter into sales contracts with the sellers of homes for a price higher than the actual price that the seller would receive. Members of the conspiracy submitted false documentation in connection with loan applications that were submitted, including fraudulent appraisals of the properties being purchased in order to justify the inflated sales price and the loan amount being sought to fund each purchase. The indictment further alleges that BABAR and others created a fictitious construction company called “Sheda Telle Construction, LLC,” in order to divert fraud proceeds to it and, in some cases, to falsely justify the artificially inflated sales price of houses based on renovations purportedly made to the property that, in fact, did not occur. BABAR and his co-conspirators then split the fraud proceeds.

Contrary to the representations made on the loan applications, it is alleged that the straw purchasers never occupied the houses as their primary residences. They defaulted on the loans they obtained and let the houses go into foreclosure.

According to statements made in court, it is alleged that BABAR and his co-conspirators conducted this scheme on more than 25 properties in New London, New Haven, and other locations in Connecticut. As a result, it is alleged that various lenders suffered a loss of at least $2.5 million.

The indictment was returned on April 27, 2010, and unsealed today. BABAR was arrested on May 12. Today, United States Magistrate Judge Donna F. Martinez in Hartford ordered BABAR detained while the case is pending.

The charges of conspiracy to commit wire fraud and wire fraud carry a maximum term of imprisonment of 20 years on each count.

U.S. Attorney Fein stressed that an indictment is only a charge and is not evidence of guilt. The defendant is entitled to a fair trial at which it is the government’s burden to prove guilt beyond a reasonable doubt.

U.S. Attorney Fein stated that the investigation is ongoing.

This case is being investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Eric J. Glover.

In July 2009, the U.S. Attorney’s Office and the Federal Bureau of Investigation announced the formation of the Connecticut Mortgage Fraud Task Force to investigate and prosecute mortgage fraud cases and related financial crimes occurring in Connecticut. In addition to investigating past mortgage fraud schemes, the Task Force will focus on emerging crime trends that are associated with the growing tide of foreclosures, including foreclosure rescue schemes, and short sale schemes. Citizens are encouraged to report any suspected mortgage fraud activity by calling 203-333-3512 and requesting the Connecticut Mortgage Fraud Task Force, or by sending an e-mail to ctmortgagefraud@ic.fbi.gov.

The Connecticut Mortgage Fraud Task Force includes representatives from the U.S. Attorney’s Office; Federal Bureau of Investigation; Internal Revenue Service – Criminal Investigation; U.S. Postal Inspection Service; U.S. Department of Housing and Urban Development, Office of Inspector General; Federal Deposit Insurance Corporation, Office of Inspector General, and State of Connecticut Department of Banking.

To report financial fraud crimes, and to learn more about the President’s Financial Fraud Enforcement Task Force, please visit www.stopfraud.gov.

PLANO, TX—A 68-year-old Dallas man has been indicted in a commercial real estate investment scheme in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.

Eric Brauss was named in a 10-count indictment for his role in defrauding investors in a commercial real estate investment scheme. The indictment was returned by a federal grand jury on Feb. 16, 2011.

The indictment alleges that Brauss raised investment capital for two large-scale retail development projects in New Mexico and Fort Worth—Unser Towne Crossing and Parkwood Crossing, respectively—by making false material representations to investors. The indictment further alleges that based on Brauss’ false representations, investors provided $2,042,000 in payments to Brauss for the Unser project and $5,998,925 in payments to Brauss for the Parkwood project, and that Brauss used most of the investment capital raised for expenditures unrelated to the two projects. Brauss faces up to 20 years in federal prison on each of the 10 counts.

This law enforcement action is part of President Barack Obama’s Financial Fraud Enforcement Task Force.

President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

This case is being investigated by the FBI and is being prosecuted by Assistant U.S. Attorney Shamoil Shipchandler.

A grand jury indictment is not evidence of guilt and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

Defendants Spent Millions of Dollars of Investor Funds to Employ Chauffeurs and Maintain a Fleet of Luxury Cars; Travel in Luxury to the Super Bowl and All-Star Game; Pay Off Prior Investors as Part of a Ponzi Scheme; and Fund a Failed Investment Venture and Undisclosed Third Party Businesses

GREENBELT, MD—A federal jury convicted Michael Anthony Hickson, age 48, of Commack, New York; Isaac Jerome Smith, age 48, of Spotsylvania, Virginia; and Alvita Karen Gunn, age 33, of Hanover, Maryland today of fraud conspiracy, wire fraud, and conspiracy to commit money laundering in connection with their participation in a massive mortgage fraud scheme which promised to pay off homeowners’ mortgages on their “Dream Homes,” but left them to fend for themselves. In addition to the above described convictions, Hickson, chief financial officer of Metro Dream Homes (MDH), was also convicted of making a false statement in a federal court proceeding.

The convictions were announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation; Special Agent in Charge Rebecca Sparkman of the Internal Revenue Service – Criminal Investigation, Washington, D.C. Field Office; Maryland Attorney General Douglas F. Gansler; and Inspector General Jon T. Rymer of the Federal Deposit Insurance Corporation.

“The defendants used slick marketing to conceal empty promises,” said U.S. Attorney Rod J. Rosenstein. “They convinced many victims to invest at least $50,000 by refinancing their existing homes or buying new homes at inflated prices, while claiming that Metro Dream Homes would repay the mortgages with revenue from profitable businesses. There was no revenue, however, to pay the mortgage payments. Instead, the conspirators used some of the investors’ money to repay earlier investors in the Ponzi scheme and spent the remainder on themselves.”

“It is exactly this type of fraud that has the attention of federal law enforcement,” stated Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation. “Cases like this that involve false promises, misleading information and fraudulent sales pitches that lure unsuspecting citizens into giving up their hard earned savings are being aggressively pursued across Maryland and the United States and will continue to be a major focus of the FBI.”

“The IRS-Criminal Investigation, along with our fellow law enforcement partners, is committed to following the money trail,” stated Rebecca Sparkman, Internal Revenue Service-Criminal Investigation Special Agent in Charge, Washington, D.C. Field Office. “This verdict shows that the appearance of success can be a mask wherein the underlying structure can fall apart at any time and leave investors in financial ruin.”

“The Federal Deposit Insurance Corporation Office of Inspector General is pleased to join the United States Attorney for the District of Maryland, Federal Bureau of Investigation, Internal Revenue Service Criminal Investigation Division, and Maryland Attorney General in announcing these convictions today. We are committed to our partnerships with others in federal, state, and local law enforcement organizations as we address mortgage fraud cases throughout the country. The American people need to be assured that their government is working to ensure integrity in the financial services and housing industries and that those involved in criminal misconduct that undermines that integrity will be held accountable.”

According to evidence presented at the six week trial, beginning in 2005, the defendants targeted homeowners and home purchasers to participate in a purported mortgage payment program called the “Dream Homes Program.” In exchange for a minimum of $50,000 initial investment and an “administrative fee” of up to $5,000, the conspirators promised to make the homeowners’ future monthly mortgage payments and pay off the homeowners’ mortgage within five to seven years. Dream Homes Program representatives explained to investors that the homeowners’ initial investments would be used to fund investments in automated teller machines (ATMs), flat-screen televisions that would show paid business advertisements, and electronic kiosks that sold goods and services. To give investors the impression that the Dream Homes Program was very successful, Metro Dream Homes spent hundreds of thousands of dollars making presentations at luxury hotels such as the Washington Plaza Hotel in Washington, D.C.; the Marriott Marquis Hotel in New York, New York; and the Regent Beverly Wilshire Hotel in Beverly Hills, California.

Trial testimony showed that in February 2007, the Dream Homes Program added a second program called “POS Dream Homes” that offered similar promises of paying off investor mortgages in five to seven years in exchange for an up-front investment of $50,000 or more. Collectively, these programs had offices in Maryland, the District of Columbia, Virginia, North Carolina, New York, Delaware, Florida, Georgia, and California.

According to trial testimony, the defendants failed to advise investors that: the ATMs, flat-screen televisions, and kiosks never generated any meaningful revenue; the defendants used the funds from later investors to pay the mortgages of earlier investors; and MDH had not filed any federal income tax returns throughout its existence. The defendants also failed to advise investors that their investments were being used for the personal enrichment of select MDH employees, including the defendants, to: pay salaries of up to $200,000 a year, as well as their mortgages; employ a staff of chauffeurs and maintain a fleet of luxury cars; and travel to and attend the 2007 National Basketball Association All-Star game and the 2007 National Football League Super Bowl, staying in luxury accommodations in both instances. Nor were investors told that investor funds were used to: pay off investors in a prior failed ATM investment venture called Bankcard Group; make multiple donations of up to $50,000 each to charitable organizations to give MDH the appearance of being financially successful; and transfer millions of dollars in investor funds to third-party businesses for purposes not disclosed to investors.

Trial testimony showed that the defendants arranged for early Dream Homes Program investors, whose monthly mortgage payments had been paid by MDH using the funds of later Dream Homes Program investors, to attend recruitment meetings to assure potential investors that the Dream Homes Program was not a fraud. MDH used a third party company to pay investors to advertise the Dream Homes Program to friends and family. MDH encouraged homeowners to refinance existing mortgages on their homes in order to withdraw equity and generate the funds necessary to enroll their homes in the Dream Homes Program.

On Aug. 15, 2007, the Maryland Securities Commissioner issued a cease-and-desist order to MDH and other related companies directing them to immediately cease the offering and sale of unregistered securities in connection with their promotion of the Dream Homes Program. However, the defendants thereafter called meetings in which investors were told that MDH was earning up to $10 million in one month and that the company’s legal difficulties were the result of either misunderstandings or racial animus against company leaders.

On Sept. 4, 2007, the defendants filed a legal challenge in federal court in Maryland to the cease-and-desist order. Trial testimony established that at a hearing on Sept. 12, 2007, Hickson testified that the financial success of the Dream Homes Program did not rely upon new investor funds, when in fact Hickson knew that the sole source of meaningful revenue for MDH was new investor funds.

As a result of the scheme, more than 1,000 investors in the Dream Homes Program invested approximately $78 million. When the defendants stopped making the mortgage payments, the homeowners were left to attempt to make the mortgage payments MDH had promised to make in full.

All three defendants face a maximum sentence of 20 years in prison for the fraud conspiracy; 20 years in prison on each of the 15 counts of wire fraud; and 20 years in prison for conspiracy to commit money laundering. Hickson also faces a maximum sentence of five years in prison for making false statements.

U.S. District Judge Roger W. Titus scheduled sentencing for Michael Hickson on July 1, 2011 at 11:00 a.m., Isaac Smith on June 27, 2011 at 1:00 p.m., and Alvita Gunn on June 27, 2011 at 2:00 p.m.

Carole Nelson, age 52, of Washington, D.C., the chief financial officer of POS Dream Homes, previously pleaded guilty to money laundering, and Charlotte Melissa Josephine Hardmon, age 39, of Bowie, Maryland, pleaded guilty to conspiracy to commit wire fraud in connection with their participation in this scheme. Both await sentencing on a date to be scheduled.

This prosecution is being brought jointly by the Maryland and Washington, D.C. Mortgage Fraud Task Forces, which are comprised of federal, state, and local law enforcement agencies in Maryland, Washington, D.C., and Northern Virginia. The task forces were formed to promote the early detection, identification, prevention, and prosecution of various kinds of mortgage fraud schemes. This case, as well as other cases brought by members of the task forces, demonstrates the commitment of law enforcement agencies to protect consumers from fraud and help to ensure the integrity of the mortgage market and other credit markets. Information about mortgage fraud prosecutions is available on the Internet at http://www.usdoj.gov/usao/md/Mortgage-Fraud/index.html.

United States Attorney Rod J. Rosenstein praised the FBI, the IRS – Criminal Investigation, the Maryland Attorney General’s Office – Securities Division, and the Federal Deposit Insurance Corporation – Office of Inspector General for their investigative work. Mr. Rosenstein thanked Assistant U.S. Attorneys for the District of Maryland Jonathan C. Su and Bryan E. Foreman, who are prosecuting the case.

HOUSTON—Melvin Lendall Brown, a Houston area resident, has been sentenced to prison for wire fraud arising from a mortgage fraud scheme, United States Attorney José Angel Moreno announced today.

This morning, United States District Judge David Hittner sentenced Brown, 48, to 57 months in prison for his wire fraud conviction arising from an elaborate mortgage fraud scheme in which Brown was an organizer and leader. Brown pleaded guilty to a single count of wire fraud arising from the scheme on April 20, 2010. The scheme, carried out between June 2004 and June 2005, involved numerous misrepresentations on mortgage loan applications prepared for recruited straw purchasers and supported by fraudulent documents. As a result of the scheme, Brown ultimately received, often via interstate wire transfer, more than $500,000 of approximately $5 million in fraudulently-induced loan proceeds from lenders to title companies. The court will determine the amount of restitution it will require Brown to pay within 90 days.

To carry out the scheme, Brown used an unincorporated business he formed under the assumed name of Brownstone Construction, which was supposedly in the business of home improvement. People he associated with located residential real estate properties in the Houston area. Brown and others recruited and solicited individuals with good credit to act as borrowers in applications for residential mortgage loans to purchase one or more of those properties even though the borrowers had no intention of making payments on the mortgage loans. Brown, aided and abetted by at least one other person, made representations to each borrower, including that he would buy the home in the borrower’s name, make any monthly mortgage payments, find others to live in the home and pay monthly rent, take the home out of the borrower’s name after a period of time, as well as compensate the borrower.

Brown and others caused Uniform Residential Loan Applications to be made in the names of the borrowers that overstated their employment income and other assets, understated or omitted their debts and other liabilities, falsely represented that the borrowers leased the homes they resided in and received income from the rent, and falsely claimed that the borrowers intended to occupy the newly purchased homes. Because of the fraudulent information, the lenders made decisions to approve the applications and fund the loans. In support of those fraudulent loan applications, false and fraudulent documents were submitted, including sham lease agreements and bogus employment information. Brown also provided funds to the borrowers to use for deposits toward the purchases of those homes and for closing fees, and he often appeared with the borrowers at the closings.

At or near the closings, Brown caused title companies to disburse the fraudulently induced loan proceeds to various individuals and entities, including Brownstone Construction. He represented to the title companies that Brownstone Construction had been hired for projects to improve those properties, when in fact he did not perform or arrange for others to complete the projects. Brown received, often via interstate wire transfer, more than $500,000 of approximately $5 million in fraudulently-induced loan proceeds, sent via interstate wire from lenders to title companies. Brown used the funds he received for expenditures unrelated to the properties that were purchased.

Brown was immediately taken into custody after sentence was pronounced. After he serves his prison term, he will begin a term of three years of supervised release.

Special agents from the Houston field office of the FBI and from the Department of Housing and Urban Development Office of Inspector General conducted the investigation leading to the charges. Assistant United States Attorney Stephen L. Corso prosecuted the case.

LAS VEGAS—A local attorney and a mortgage loan officer have been charged with conspiracy to commit bank, mail and wire fraud for allegedly participating in a scheme to obtain mortgage loans from financial institutions using straw buyers and false loan applications, announced Daniel G. Bogden, United States Attorney for the District of Nevada.

Stanley Walton, 52, and Pamela Black, 62, both of Las Vegas, were indicted by the federal grand jury on Wednesday, February 16, 2011, on one count of conspiracy to commit bank, mail and wire fraud and criminal forfeiture. They were summoned to appear for an arraignment and plea on Wednesday, February 23, 2011, at 3:00 p.m. before U.S. Magistrate Judge Robert J. Johnston.

According to the indictment, from about September 22, 2004, to January 24, 2007, Walton, an attorney who practices in Las Vegas, Black, a mortgage loan officer, and other unindicted co-conspirators, allegedly conspired to recruit straw buyers with good credit to purchase houses in Henderson and Las Vegas. The indictment does not charge Walton with acting as an attorney when he engaged in the alleged fraudulent conduct. The straw buyers were paid by Walton to place the homes in their names, and they did not intend to occupy the homes.

Walton and Black then allegedly created and submitted loan applications containing false and fraudulent information about the straw buyers’ employment, income, intent to occupy the property, and disposition of the loan proceeds. Walton allegedly assisted in this regard by providing false employment verifications for some of the straw buyers at a company he owned.

Walton and Black concealed from the lenders that Walton and his companies were receiving the cash back monies at closing and also concealed that, in some instances, Walton intended to use the cash to make mortgage payments and to pay straw buyers for participating in the scheme.

Black received commissions from her employer as a result of the fraudulently obtained loans.

The indictment specifically identifies six homes in Henderson and two homes in Las Vegas for which mortgage loans were obtained using fraudulent documents submitted by the defendants. The indictment alleges that upon conviction, the defendants shall forfeit up to approximately $2.5 million of proceeds traceable to these alleged crimes.

The investigation is being conducted by the FBI, and the case is being prosecuted by Assistant U.S. Attorney Kathryn C. Newman.

The public is reminded that an indictment contains only charges and is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

Earlier today in federal court in Minneapolis, a 46-year-old Cottage Grove man pleaded guilty to defrauding investors out of more than $5 million in a multi-state house-flipping scheme. Appearing before United States District Court Chief Judge Michael J. Davis, Robert W. Dufresne pleaded guilty to one count of mail fraud and one count of money laundering in relation to his crime. He was charged on February 7, 2011.

In his plea agreement, Dufresne admitted that between October of 2005 and October of 2008, he sought investors to supply funds purportedly for the purchase, rebuilding, and resale of residential properties in Minnesota and other states. Investors expected the sale proceeds to be divided among them. However, Dufresne used the initial investment funds for his personal benefit and relied on subsequent investment funds to pay off the initial investors.

For his crimes, Dufresne faces a potential maximum penalty of 20 years in federal prison on the mail fraud charge and 10 years for money laundering. Judge Davis will determine his sentence at a future hearing, yet to be scheduled.

This case is the result of an investigation by the U.S. Postal Inspection Service, the Federal Bureau of Investigation, and the Internal Revenue Service-Criminal Investigation Division. It is being prosecuted by Assistant U.S. Attorney Robert M. Lewis.

BOSTON—A Massachusetts man, also living in Florida, was charged today in federal court with mail and wire fraud in connection with a six-year scheme involving purported investments in “life settlements,” in which it is alleged that he defrauded about 20 victims of approximately $4 million.

JOSEPH GENNACO, 67, of Winthrop, and Jupiter, Fla., was indicted on five counts of wire fraud and 13 counts of mail fraud. The indictment alleges that from 2002-2008, GENNACO engaged in a scheme to defraud investors by misrepresenting to people how those funds would be used, invested and repaid. He instead diverted the funds for his own personal and business purposes.

According to the indictment, GENNACO operated in the name of several entities, including Gennaco & Associates, Oceanview Financial Services, GCT Trust, and Crescent Management Group. GENNACO’s alleged scheme centered on misrepresentations to investors that their funds would be invested in one or more life insurance policies—or “life settlements”—and that the investments would be repaid with a guaranteed profit from the proceeds of the sale of those policies. Instead, according to the charges, GENNACO diverted investors’ funds to his own uses, allowed insurance policies to lapse by failing to pay the premiums, and failed to repay investors when he sold the policies. The charges allege that GENNACO obtained approximately $4 million from about 20 victims.

If convicted on these charges, GENNACO faces up to 20 years’ imprisonment, to be followed by three years of supervised release, and a $250,000 fine.

United States Attorney Carmen M. Ortiz; Robert Bethel, Inspector in Charge, U.S. Postal Inspection Service; and Richard DesLauriers, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division announced the charges today. The case was investigated by the U.S. Postal Inspection Service and the FBI. Assistance was also provided by the Suffolk County District Attorney’s Office and the Massachusetts Securities Division. It is being prosecuted by Assistant U.S. Attorney Mark J. Balthazard of Ortiz’s Economic Crimes Unit.

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

BOSTON—The former accountant of North Attleboro-based Ocean Fresh Seafood, Inc., was sentenced yesterday in federal court today for his role in concealing a scheme to defraud Wells Fargo Business Credit, Inc., a division of Wells Fargo Bank NA, of at least $7 million.

FRED GUARINO, 62, of Rehobeth, was sentenced by United States District Judge Joseph L. Tauro, to three years probation and ordered to pay $250,000 in restitution to Wells Fargo and a $4,000 fine.

On November 17, 2010, GUARINO pleaded guilty to misprision of felony. GUARINO, a certified public accountant, and his East Providence-based firm, Dacey & Guarino and Company, audited the financial statements of Ocean Fresh Seafood, Inc. As GUARINO knew, since 2002, Wells Fargo had extended a line of credit to Ocean Fresh, secured by Ocean Fresh’s accounts receivable and inventory. The former owner of Ocean Fresh, Robert Coutu, with the assistance of other Ocean Fresh employees, had inflated Ocean Fresh’s receivables and inventory balances in order to borrow millions of dollars more than their actual business activity would have permitted. In order to accomplish the scheme, Coutu and others created false invoices and wired funds from Ocean Fresh’s bank account to accounts managed by affiliates and friends of Coutu in order to give the appearance that Ocean Fresh was buying and selling much more product than it actually was.

GUARINO signed blank checks which Coutu and his employees used to “pay” the fictitious receivables. GUARINO also signed off on Ocean Fresh’s financial statements, which were provided to Wells Fargo, even after he and others working for him had questioned the authenticity of Ocean Fresh invoices.

Coutu has pleaded guilty to bank fraud, conspiracy, and money laundering. In addition, Ocean Fresh’s former Controllers, Christopher Day and Cynthia Larose have pleaded guilty to conspiracy to commit bank fraud, along with Coutu. Larose was sentenced to three years probation. Coutu and Day are awaiting sentencing.

United States Attorney Carmen M. Ortiz, Richard DesLauriers, Special Agent in Charge of the Federal Bureau of Investigation – Boston Field Division, and William P. Offord, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation – Boston Field Office made the announcement today.

The case was prosecuted by Assistant U.S. Attorneys Sarah E. Walters and Vassili N. Thomadakis of Ortiz’s Economic Crimes Unit.

TRENTON, NJ—A former Jersey City, N.J., police officer admitted today to making false and fraudulent statements in an application to obtain a Federal Housing Administration-insured mortgage for the purchase of a Jersey City property, U.S. Attorney Paul J. Fishman announced.

Brian Ragauckas, 37, of Secaucus, N.J., pleaded guilty to an information charging him with making false and fraudulent statements within the jurisdiction of the United States Department of Housing and Urban Development (HUD). He entered his guilty plea before U.S. District Judge Peter G. Sheridan in Trenton federal court.

According to documents filed in this case and statements made during Ragauckas’ guilty plea proceeding:

In June 2000, Ragauckas purchased a home with his wife in Secaucus, N.J. In April 2007, Ragauckas and his wife obtained a $513,700 mortgage for the residence from Hudson City Savings Bank.

In September 2008, Ragauckas signed and submitted a Uniform Residential Loan Application, (URLA), to Countrywide Bank, FSB for the purpose of obtaining a $529,779 mortgage to could purchase a three-family home in Jersey City. Ragauckas falsely represented in the URLA that he rented the Secaucus residence, and had not owned any property in the last three years. He also failed to acknowledge the outstanding mortgage that he had with Hudson City Savings Bank when asked to list his outstanding liabilities. Additionally, Ragauckas signed an addendum in which he falsely represented that the information contained in the URLA was true to the best of his knowledge and belief. Ragauckas was serving as a Jersey City police officer at the time.

Ragauckas admitted that he made the false representations in order to secure the mortgage. By May 2009, the mortgage with Countrywide Bank, FSB, which merged with Bank of America in April 2009, was in default due to Ragauckas’ inability to make payments on the Jersey City property in addition to his Secaucus residence.

The charge to which Ragauckas pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine. Sentencing is scheduled for June 1, 2011.

U.S. Attorney Fishman credited special agents from the FBI, under the direction of Special Agent in Charge Michael B. Ward in Newark, with the investigation leading to the guilty plea.

The government is represented by Assistant U.S. Attorney Leslie F. Schwarz of the United States Attorney’s Office Criminal Division in Newark.

Defense counsel: Robert Galantucci, Esq., Hackensack, N.J.