Four Individuals Involved in Mortgage Fraud Scheme are Sentenced
|U.S. Attorney’s Office August 28, 2012|
David B. Fein, United States Attorney for the District of Connecticut, today announced that four individuals involved in an extensive mortgage fraud scheme were sentenced on Friday, August 24, by Chief United States District Judge Alvin W. Thompson in Hartford.
According to court documents and statements made in court, between February 2007 and April 2010, Syed Babar of New London orchestrated 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.
As a result of the approximately 30 fraudulent mortgage transactions conducted by Babar and his co-conspirators, various lenders suffered total losses of approximately $4.75 million.
Alicia Martineau, 25, of West Haven, was sentenced to six months of imprisonment, followed by three of years of supervised release. On January 31, 2011, she pleaded guilty to one count of to one count of conspiracy to commit wire fraud.
Martineau acted as a straw buyer who allowed her name and identifying information to be used to obtain mortgage loans to purchase properties at fraudulently inflated prices. Specifically, on October 1, 2009, Martineau purchased a residence at 211 Lloyd Street in New Haven after working with others to obtain an FHA-insured loan to buy the house at the fraudulently inflated price of $160,000.
The loan package for this transaction included false information about the Martineau’s employment, assets, and liabilities, and Martineau’s intention to occupy the property as her principal residence. The loan application also was supported by false documentation, including earning statements and fraudulent bank records.
After the closing, Martineau was given $10,000 in cash in a black plastic bag for serving as a straw buyer. The house was in extremely poor condition both before and after Martineau purchased it, she had no intention of ever living at the property, and she never received keys to the residence. Martineau did not make any mortgage payments, and the property later went into foreclosure.
Martineau was ordered to pay restitution in the amount of $102,181.28.
Wilson Nicolas, 29, of Groton, was sentenced to three months of imprisonment, followed by three years of supervised release. On February 4, 2011, he pleaded guilty to one count of conspiracy to commit wire fraud.
Nicolas acted as a straw buyer who allowed his name and identifying information to be used to obtain mortgage loans to purchase two properties in New Haven at fraudulently inflated prices. In 2008, Nicolas worked with Babar and others to obtain FHA-insured loans to buy a house at 243 Starr Street at the fraudulently inflated price of $175,000 and a house at 88 Hazel Street for the fraudulently inflated price of $180,000. Babar had instructed Nicolas to open a joint bank account with an individual whom Nicolas did not know in order to give the appearance Nicolas had access to more money than he actually had. The loan applications also falsely represented where the defendant worked. After the closings, Nicolas received $40,000 in cash from a co-conspirator and later returned $8,000 to the co-conspirator to be used in another real estate transaction. Nicolas never occupied either of the two houses on which he served as a buyer, and he defaulted on both of the loans.
Nicolas was ordered to pay restitution in the amount of $271,706.24.
Lisa Depa, 26, of Middletown, was sentenced to five years of probation. On January 28, 2011, she pleaded guilty to one count of conspiracy to commit wire fraud.
In July 2008, Depa purchased two houses in New Haven. Working with her co-conspirators, Depa obtained loans to buy a house at 39 Lilac Street at a fraudulently inflated price of $183,000 and to buy a house at 433 Shelton Street at a fraudulently inflated price of $249,000. As part of the scheme to defraud lenders, Depa, at the direction of others, registered a fake company with the Connecticut secretary of the state and also had herself added to a bank account held in the name of a co-conspirator. After the closings for the properties for which she acted as a straw buyer, Depa met a co-conspirator in a bank parking lot and received a bag containing $40,000 in cash. Depa never occupied either of the two houses on which she served as a buyer, and she defaulted on both of the loans.
Depa was ordered to pay restitution in the amount of $328,688.11.
Richard Novak, 49, of Middletown, was sentenced to five years of probation. On March 1, 2011, he pleaded guilty to one count of making a false statement on a federal mortgage loan document.
Novak, an attorney, represented the seller of a residence located at 97 Bradford Avenue in East Haven. Novak also had power of attorney for the seller and had previously lived at the residence. In connection with the closing for the property, which occurred on approximately June 4, 2008, Novak knowingly signed a HUD-1 Settlement Statement that contained several false statements, including an overstatement of the amount required to pay off a second lien on the property, a representation that the buyer had paid a $22,000 deposit when no deposit was ever paid, a representation that $48,345.62 was owed to “Sheda Telle Construction” for an “outstanding invoice” when there was no outstanding invoice, and a representation that $6,140 of the seller’s funds would be used to pay off “GE Money Bank for PMSI in appliances” when no such payoff was owed.
Sheda Telle Construction was a fictitious entity to which Babar and his co-conspirators diverted proceeds of the fraud scheme.
The 97 Bradford Street property eventually went into foreclosure.
Novak has been ordered to pay restitution in the amount of $145,000.
Thirteen individuals have been convicted in connection with this scheme.
On November 28, 2011, Syed Babar was sentenced to 120 months of imprisonment.
Six other scheme participants have received prison terms ranging from 30 to 90 months.
This case was investigated by the Federal Bureau of Investigation and the U.S. Department of Housing and Urban Development-Office of Inspector General and is being prosecuted by Assistant United States Attorneys Eric J. Glover, Susan Wines, and Liam Brennan.
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 firstname.lastname@example.org.
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.