Fraudster Sentenced to Prison for Illegal Flipping Scheme

Allison Tussey —  November 20, 2013 — Leave a comment

Juan Velez, 60, Waterford, Connecticut, was sentenced by U.S. District Judge Robert N. Chatigny to 12 months and one day of imprisonment, followed by five years of supervised release, for his role in a mortgage fraud scheme.

Judge Chatigny also ordered Velez to spend the first six months of his supervised release in home confinement and to perform 120 hours of community service.

According to court documents and statements made in court, in 2006 and 2007, Velez and others engaged in a mortgage fraud scheme involving multiple properties in New London. As part of the scheme, Velez acquired properties from a co-defendant and other individuals and then sold the properties to another co-defendant, Flavia Mendoza, at inflated prices using fraudulently obtained mortgage loans.

On June 20, 2013, Velez pleaded guilty to one count of bank fraud. In pleading guilty, Velez specifically acknowledged that he was involved in the fraudulent transaction of a property located at 624-626 Montauk Avenue, New London. When Velez sold the property to Mendoza, the loan paperwork contained multiple false statements, including information related to Mendoza’s income, her intention to occupy the property as her primary residence, and the amount of money she was providing to purchase the property.

Additionally, the Housing and Urban Development Settlement Statement form (“HUD-1”), which Velez signed, falsely stated that Mendoza had provided Velez with approximately $29,760 for the purchase of the property when Mendoza had not, in fact, provided any down payment money for the transaction. Based on these false statements, Mendoza obtained a mortgage loan in the amount of $492,699 from the bank.

Velez, Mendoza, and others shared the profits of this and other fraudulently obtained residential mortgage loans, which totaled more than $1.2 million.

Judge Chatigny ordered Velez to pay restitution in the amount of $908,695.64 to four victim financial institutions.

Mendoza has pleaded guilty and awaits sentencing.

Deirdre M. Daly, Acting United States Attorney for the District of Connecticut, announced the sentence.

This matter was investigated by the U.S. Postal Inspection Service, the Internal Revenue Service-Criminal Investigation, and the Federal Bureau of Investigation. The case is being prosecuted by Assistant U.S. Attorneys Michael S. McGarry and Peter S. Jongbloed.

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Allison Tussey

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