Connecticut Man Sentenced to 4 Years for Defrauding Lenders

Allison Tussey —  September 2, 2009 — 2 Comments

Edward J. Safdie, 71, Madison, Connecticut, was sentenced September 1, 2009, by United States District Judge Janet Bond Arterton in New Haven to 51 months of imprisonment, followed by five years of supervised release, for engaging in a fraud scheme during which he received funding from multiple sources to assist him in purchasing The Inn at Chester, Chester, Connecticut. On January 14, 2009, Safdie waived his right to indictment and pleaded guilty to one count of mail fraud and one count of bank fraud.

According to documents filed with the Court and statements made in court, in late 2002, Safdie approached Acorn Capital, a Greenwich-based assets lending firm, and represented to the firm that he needed $1 million to place in escrow to secure $3.5 million in financing in order to purchase The Inn at Chester. In January 2003, Safdie provided false and fraudulent documents to Acorn Capital that vastly overstated his personal wealth, including brokerage account statements that Safdie fabricated. The securities named in the fabricated statements served as collateral for the loan, and Acorn Capital wired $1 million to Safdie. Safdie then represented to Citizens Bank that the $1 million he received from Acorn Capital was his own, and that he was going to use the funds for a down payment on his purchase of The Inn at Chester. Safdie also provided false brokerage account statements to Citizens Bank and made other misrepresentations related to his personal wealth to the bank.

On February 19, 2003, Safdie, operating through 318 Main LLC, purchased The Inn at Chester from a third-party for approximately $2.35 million. On that same date, Safdie caused 318 Main LLC to sell The Inn at Chester to Quantum 318 LLC, which he also controlled, and did so using $3.5 million in loan proceeds obtained from Citizens Bank. Safdie then used the proceeds from the Citizens Bank loan to pay back the original $1 million Acorn Capital loan.

Thereafter, Safdie induced Acorn Capital to provide him with a $2 million revolving loan facility, of which Safdie drew down approximately $1.1 million. Safdie continued to provide fabricated brokerage account statements to Acorn Capital.

In 2005, using the Inn at Chester as security, Safdie refinanced the Inn and, by way of the refinanced mortgage, received approximately $4.5 million from Beal Bank, Plano, Texas. Safdie then used a significant portion of the funds to repay the fraudulently obtained Citizens Bank loan. Eventually, Safdie failed to repay the Beal Bank loan, and Beal Bank foreclosed on The Inn. In February 2007, Beal Bank and Safdie entered into a stipulated judgment wherein Beal Bank took title to the property. In April 2008, Beal Bank sold the property for a gross sales price of $2.45 million, significantly less than the $4.5 million mortgage.

During the sentencing proceeding, Judge Arterton ordered Safdie to pay restitution of approximately $1.1 million to Acorn Capital.

Nora R. Dannehy, United States Attorney for the District of Connecticut, announced the sentencing. This case was investigated by the Federal Bureau of Investigation. The case was prosecuted by Assistant United States Attorney Michael S. McGarry with the assistance of law student intern Jonathan Schaefer.

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Allison Tussey

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2 responses to Connecticut Man Sentenced to 4 Years for Defrauding Lenders

  1. M.D. de la Chaumette September 3, 2009 at 7:04 pm

    Safdie has operated his entire life under falsehoods. He is a crook just like Madoff and the rest of his ilk. 51 months is nothing for a lifetime of bad deeds and scams……God help him

  2. voyageHomeLoansCA September 2, 2009 at 10:11 pm

    I don’t think Mr. Safdie has ever seen “Catch me if you can”? If you ask Frank Abagnale he’d probably tell you eventually every fraudster get’s caught. What is it going to take for banks, mortgage lenders, mortgage brokers, and investors to get it? In today’s lending environment with all the fraud going on you would think that before making a loan the bank would take the necessary steps to be absolutely sure they are making a sound investment right? I’m interested to know if the loan processors and underwriters were held accountable for their mistakes in this transaction. They clearly did not verify all the income, assets, and other compensating factors of this individual’s profile before making their loan decision.
    Jason Estes
    Voyage Home Loans

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