Rhode Island Closing Attorney Gets 42 Months For Pocketing $2.5M In Escrow Funds & Failing To Pay Off Existing Mortgages In Real Estate Transactions

From the Office of the U.S. Attorney (Providence, Rhode Island):

• A federal judge has sentenced Pasquale Scavitti, III, a former attorney based in Cranston, to 42 months in prison for diverting more than $2.5 million in mortgage funds from his firm’s client account for personal use.

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• As part of his practice, he maintained a client escrow bank account. Mortgage Guarantee and Title Company, a real estate title and closing company, utilized the services of Scavitti’s law office to facilitate mortgage lending. As part of those services, mortgage and refinancing proceeds were wired into the client escrow account at Scavitti’s firm. The firm’s obligations were to pay off existing liabilities from those loan proceeds. Between 2003 and August 2008, Scavitti directed that client escrow account funds not be used to pay off the corresponding existing mortgages but rather to pay for various personal and business expenses. Escrow funds were also used to pay off previously negotiated mortgages that were already delinquent, since they had not been paid off in a timely fashion.

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• In September 2007, Mortgage Guarantee terminated the authority of Scavitti’s law office and its attorneys from acting as approved attorneys for Mortgage Guarantee. However, for subsequent mortgages, Scavitti contacted other attorneys to act as title attorneys on real estate transactions and closings. For these transactions, Scavitti falsified letters purporting to authorize his firm to act as the approved attorney for Mortgage Guarantee.(1)

For the U.S. Attorney press release, see Attorney is sentenced in $2.5 million mortgage fraud scheme.

(1) As a result of Scavitti’s fraudulent scheme, he failed to pay off 13 mortgage loans and refinancing transactions, resulting in total losses of approximately $2.5 million to borrowers and financial institutions, the press release states. EscrowRipOffKappa