Connecticut Man Admits Role In Mortgage Fraud Scheme

admin —  March 3, 2009 — Leave a comment

William Athan, 63, Shelton, Connecticut and Naples, Florida, waived his right to indictment and pleaded guilty today before United States District Judge Vanessa L. Bryant in Hartford, Connecticut, 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, Connecticut, 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.

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