Boston; 11 are charged in $10.6 million loan-fraud scam
boston.com
By Kimberly Blanton
Globe Staff / May 17, 2008
The Justice Department yesterday charged two Boston lawyers, seven mortgage brokers, and two others with fraudulently obtaining more than $10.6 million in loans using straw buyers or stolen identities to purchase 21 properties in the Boston area.
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Federal officials said it is the biggest mortgage fraud in Massachusetts since the 1980s. During the height of the housing boom in 2005 and 2006, the lawyers and brokers allegedly falsified information about borrowers and inflated the purchase price of homes by as much as $250,000 to fool mortgage lenders and banks into loaning them more money, according to the charges filed yesterday in US District Court in Boston.
The ring netted about $1.7 million in profit.
In several cases, authorities said, the lawyers and brokers would have straw buyers use stolen identities to purchase properties and borrow funds.
Many of the buyers apparently did little to repay the loans. At least 14 of the 21 properties involved have been seized by lenders, according to county deed records. The properties are in Brockton, Quincy, Cohasset, and the Boston neighborhoods of Dorchester, Hyde Park, Jamaica Plain, Mattapan, and South Boston.
Nine individuals were charged in federal court yesterday afternoon, after agents from the FBI and other law enforcement agencies fanned out at 6 a.m. to arrest them. They were unable to locate two defendants.
The nine arrested pleaded not guilty to the charges. Two are lawyers in their 50s; most of the others are in their 20s or early 30s.
US Attorney Michael Sullivan, who brought the case, said that the victims of these schemes included not only lenders and the people whose identities were stolen, but entire neighborhoods that are seeing housing values plummet because so many homes are in foreclosure.
The loans were obtained during a frenzied period in real estate markets, when regulators have since determined many lenders were in such a rush to make loans that they used sloppy procedures and failed to scrutinize mortgage applicants. Prosecutors did not make any claims against the lenders in these transactions, nor did they explain how the defendants were able to get inflated loans.
Two Boston lawyers, Eric L. Levine, 55, of Brookline and J. Daniel Lindley, 59, of Jamaica Plain were involved in all the transactions, according to court papers. Levine also owned one property involved, a two-family on Estrella Street in Jamaica Plain. Levine's law license was suspended in 2003, and the suspension was extended in 2004 for four years.
Levine and Lindley were each charged yesterday with one count of conspiracy, 41 counts of wire fraud, and 19 counts of money laundering. If convicted, they face jail sentences of five to 20 years and fines of up to $1 million. Both worked out of an office at 8 Winter St. in Boston, which was also the address of various shell companies allegedly used in the scheme.Continued... |
