3 Indicted for Defrauding Lenders

Allison Tussey —  July 29, 2010 — Leave a comment

Steven J. Kottage, 44, and Genaro R. Hathaway, 46, both of Weston, Connecticut, and Mary Ellen Durso, 53, Milford, Connecticut, were charged in an 11-count indictment with conspiracy and other offenses stemming from the defendants alleged involvement in mortgage fraud.

The indictment alleges that Kottage and Hathaway, who are married, conspired to commit wire fraud relating to a home on Fire Island, New York. Hathaway, a former attorney in Connecticut and New York, and Kottage purchased and financed the property in the name of Kottage‘s mother by filing false loan applications to Wells Fargo Home Mortgage. In each instance, Hathaway served as the closing attorney on behalf of Kottage‘s mother and Wells Fargo. The indictment further alleges that Hathaway subsequently purchased the property from Kottage‘s mother’s estate in his own name and, in so doing, made a materially false loan application to H&R Block Home Mortgage to obtain a separate mortgage. Rather than using the sale proceeds due and owing to Kottage‘s mother’s estate to pay off the outstanding loans issued by Wells Fargo, Kottage and Hathaway used those proceeds to pay off an obligation arising from a separate real estate transaction in which Hathaway served as the closing attorney for the seller. The losses resulting from this alleged conspiracy exceed $500,000.

The indictment further alleges that Kottage, Hathaway, and Dursoconspired to commit bank fraud by filing a materially false loan application to Washington Mutual to refinance a condominium in Hillsboro Beach, Florida. Durso served as the straw owner for the condo in order to obtain the fraudulent loan proceeds for the benefit of Kottage and Hathaway.

 

The indictment also charges Hathaway with tax evasion in 2005 and Durso with filing false tax returns from 2004 to 2008.

 

The indictment charges Kottage and Hathaway with two counts and Durso with one count of conspiracy, a charge that carries a maximum term of imprisonment of 30 years on each count. The indictment further charges Kottage and Hathaway with two counts of wire fraud, a charge that carries a maximum term of imprisonment of 30 years on each count. Kottage, Hathaway and Durso are each charged with one count of bank fraud, which carries a maximum term of imprisonment of 30 years. The one count of tax evasion against Hathaway carries a maximum term of imprisonment of five years, and the five counts of filing false tax returns against Durso carry a maximum term of imprisonment of three years, on each count.

David B. Fein, United States Attorney for the District of Connecticut, announced the charges. 

 

U.S. Attorney Fein stressed that an indictment is not evidence of guilt. Charges are only allegations, and each defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.

This case is being investigated by the Federal Bureau of Investigation and the Internal Revenue Service – Criminal Investigation. The case is being prosecuted by Assistant United States Attorney David T. Huang.

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 email 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.

 

 

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Allison Tussey

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