Man Admits Participating in Bank Fraud Scam

Allison Tussey —  October 22, 2010 — 1 Comment

Kevin W. Caffrey, 45, Wolcott, Connecticut, pleaded guilty on October 14, 2010, before United States District Judge Janet C. Hall in Bridgeport, Connecticut, to one count of bank fraud and one count of filing a false tax return. The charges stem from Caffrey‘s role in a scheme that defrauded Webster Bank of nearly $6.2 million.

According to court documents and statements made in court, between approximately May 2000 and May 2006, Caffrey was married to an individual who worked at Webster Bank in the Property Services Division. The Property Services Division was responsible for, among other things, the acquisition and leasing of properties for Webster Bank‘s Retail Banking business. In 2002, Caffrey and others formed New House LLC and registered the limited liability company with the Connecticut Secretary of State’s Office. The only listed member for New House was Caffrey and its business address was 272 Hauser Street, Waterbury, Connecticut, a property owned by Caffrey or his mother since the 1960s.

As part of a scheme to defraud Webster Bank, Caffrey and others falsely represented to Webster Bank‘s Vendor Management Department that New House LLC was a legitimate company entitled to certain fees because of real estate transactions entered into by the bank. In fact, New House LLC was a sham company that never acted as a broker or landlord in any real estate transactions and, between 2002 and at least 2008, Caffrey and others executed a fraudulent scheme that caused Webster Bank to make payments to New House LLC. Between June 2002 and December 2007, Caffrey and others submitted paperwork that falsely represented New House LLC was due a commission from numerous Webster Bank real estate transactions, causing Webster Bank to make approximately 90 payments totaling nearly $4.3 million to Caffrey and others. As part of the scheme, Caffrey had possession over the checkbook for New House LLC‘s bank account, was aware of the fraudulent deposits made to the bank account and was involved in the disbursement of funds from the bank account to himself and others.

The government has alleged that the scheme continued from January 2009 to January 2010 without Caffrey‘s participation.

Caffrey argues that the total amount of the fraud that should be attributed to him is $1,073,064.90 and the government takes the position that he is responsible for the full amount of the fraud involving New House LLC, which is approximately $4.3 million.

Caffrey did not file federal tax returns on behalf of New House LLC, and failed to report the proceeds of the fraud on his personal federal tax returns. In the 2005 through 2008 tax years, Caffrey failed to report more than $353,000 in income, resulting in a tax loss to the government of $90,054.

Judge Hall has scheduled sentencing for January 18, 2011, at which time Caffrey faces a maximum term of imprisonment of 33 years and a fine of up to approximately $2 million. Caffrey also will be ordered to resolve his tax liability with the Internal Revenue Service, including the payment of applicable interest and penalties.

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

This matter 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 Nora R. Dannehy.

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Allison Tussey

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One response to Man Admits Participating in Bank Fraud Scam

  1. Hi,

    In case of a bankruptcy, according to section 506, when the amount owed on the first mortgage exceeds the total equity in the residence, it strips of the second mortgage. In that case foreclosing a property based on solely on the second mortgage is not a valid reason and illegal. I purchased my property for $325000 and bank foreclosed it for $45132. The foreclosure was solely based on the second mortgage. I filed bankruptcy and received a discharge notice a little before the foreclosure of my property. Can you please refer me to an appropriate place or an attorney who can help me get my property back.

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