Mass. AG Indicts Six In Alleged Mortgage Fraud Flipping Scam; $12M+ In Fraudulently Obtained Loan Proceeds Used In Purchase & Sale Of 26 Homes

In Boston, Massachusetts, The Patriot Ledger reports:

• Six people, including a 29-year-old Brockton resident and a Walpole man who used to have a law practice in Quincy, were charged in a $2 million mortgage fraud scheme. They offered to buy long-unsold properties for below the listing prices, and recruited others to buy the properties as an investment with a promise to renovate them, Attorney General Martha Coakley said. Instead, they allegedly failed to upgrade the units, obtained inflated appraisals, and pocketed the difference.

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• [Boston Equity Investments (“BEI”)] asked homeowners to give them an option to [buy] the properties at below-list price, prosecutors said, and recruited out-of-state buyers willing to buy the properties as investments. BEI obtained false purchase-and-sale agreements on the properties, so investors received far less money than banks had offered in financing, Coakley said.(2) BEI allegedly garnered a windfall of $50,000 to $100,000 at the closings of each property.

• The attorney general’s office began an investigation after complaints from buyers who were facing foreclosure. [...] The alleged scheme involved 26 properties in Greater Boston, Coakley said.

For the story, see Six charged in mortgage fraud scheme (Brockton man, disbarred Quincy attorney among those indicted in Ponzi-like scam).

For the Massachusetts AG press release, see AGO Announces Indictments in Elaborate Mortgage Fraud Scheme.

(1) According to the story, a Suffolk County grand jury indicted three principals in a Boston real estate company, two mortgage brokers and a disbarred lawyer from Walpole. Joshua Brown, 29, of Brockton, Brian Frank, 32, of New Hartford, N.Y., and John Sweetland, 28, of Yorba Linda, Calif., were charged with multiple counts of larceny over $250 and making false statements. Brown operated Boston Equity Investment in Boston, and Frank ran a real estate company in New Jersey, prosecutors said. Sweetland operated Boston Investment Marketing, which was based in Canton and allegedly recruited potential investors, the story states. Mortgage brokers Brian Arrington, 39, of Boston and Linda Defeo, 28, of Springfield were charged with larceny over $250 and making false statements. Bruce Namenson, 47, of Walpole, was charged with larceny over $250 and making false statements. Namenson had worked as a lawyer in Quincy, but he was recently disbarred, Coakley said.

(2) According to the press release issued by the Massachusetts Attorney General's Office, authorities allege that after the home sellers gave the option to buy to BEI, BEI obtained purchase and sale agreements between the homebuyers and sellers. They ultimately fraudulently obtained approximately $12.5 million in loans from more than a dozen financial lending institutions to purchase multi-family homes, from which they made approximately $2 million dollars in proceeds, the Massachusetts Attorney General alleges.