Restitution Ordered for Role in Mortgage Fraud Scam

admin —  May 13, 2010 — Leave a comment

Richard E. Doherty, 65, Norwich, Connecticut, has been ordered to pay $185,657 in damages and civil penalties for engaging in mortgage fraud that resulted in a string of foreclosures in Adams, Greenfield, North Adams, and Pittsfield, Massachusetts.The final judgment, entered by Suffolk Superior Court Judge Elizabeth Fahey last week, determined Doherty violated the Consumer Protection Act when he obtained loan proceeds by fraudulently procuring mortgages on multi-family homes and commercial buildings in communities in Western Massachusetts.

The lawsuit argued that Doherty and four mortgage brokers devised a scheme to obtain mortgage loans for property purchases and refinances by submitting false qualifying information and documentation. Doherty then failed to repay the mortgages and allowed the houses to fall into foreclosure, according to the lawsuit. The mortgage brokers entered a consent judgment in November 2009, agreeing to cease brokerage activities in Massachusetts and to pay restitution to the affected communities.

The lawsuit details Doherty’s deceptive acts, noting that he would repeatedly provide false information in his applications for mortgage and refinance loans. As a result, he was able to quickly purchase a string of multi-family and commercial properties primarily in the Western Massachusetts communities of Adams and North Adams. The lawsuit asserts that Doherty failed to maintain his buildings, permitting nearly each one to fall into serious disrepair, displacing tenants, and harming neighbors and the subject municipalities. Lenders foreclosed on nearly all of his properties. In several instances, properties were condemned and even razed by the municipalities after Doherty abandoned them.

The announcement was made Attorney General Martha Coakley.

Mr. Doherty allowed his numerous properties to fall into serious disrepair, at great cost to the surrounding communities. Lenders have foreclosed on nearly all the properties and in several instances, properties were condemned by the municipalities after Mr. Doherty abandoned them,” said AG Coakley. “This final judgment not only holds Mr. Doherty accountable for his deceptive actions, but it also provides relief to the affected towns and cities.”

In addition to the damages and civil penalties Doherty is required to pay, the final judgment precludes Doherty, or any business entity he may form or participate in, from engaging in any unfair or deceptive acts in any future real estate transactions.

This case was prosecuted by Assistant Attorneys General Claire Masinton, Glenn Kaplan and Amy Gwiazda of Attorney General Coakley’s Insurance and Financial Services Division, with assistance from Investigators Quinton Dale, Christine Murphy, Monique Cascarano and Nancy Ward.

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