Federal Judge Clobbers Sobbing Sale Leaseback Peddler With 270 Months For Victimizing 17 Minn. Homeowners In Equity Stripping, F'closure Rescue Ripoff

From the Office of the U.S. Attorney (St. Paul, Minnesota):

• A 41-year-old Prior Lake man was sentenced [] in federal court in St. Paul on charges connected to an equity-skimming scheme that targeted vulnerable homeowners. United States District Court Judge Patrick J. Schiltz sentenced Michael Fiorito to 270 months in prison on one count of conspiracy to commit mail fraud and six counts of mail fraud.(1)

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• According to court documents and evidence presented at trial, Fiorito was a mortgage broker at three different Minnesota mortgage companies between 2004 and 2007. During that time, he worked with his assistant, Kristin Louise Jerde, to devise a scheme to defraud homeowners who were in foreclosure or behind on their mortgage payments. Specifically, Fiorito and Jerde caused those homeowners to refinance their home loans or sell their homes outright to Fiorito. Then, he stole their money, either taking the equity checks produced during the refinancing process or the closing checks intended for the sellers of the homes he supposedly purchased.

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• Between January 2005 and March 2007, Fiorito fraudulently converted to his own use almost $500,000 in equity as a result of his illegal activity. His victims included 17 people from Janesville, Mound, Duluth, Mankato, Prior Lake, Spring Lake Park, Austin, Golden Valley, Vadnais Heights, and Shoreview, Minnesota.(2)

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• In connection to this crime, Fiorito’s assistant, Kristin Louise Jerde, pleaded guilty to one count of conspiracy to commit mail fraud. On September 9, 2009, she was sentenced to serve three years of probation and ordered to pay $364,092.24 in restitution.

For the U.S. Attorney press release, see Former mortgage broker sentenced to nearly 23 years in prison for defrauding vulnerable homeowners.

See also the Minneapolis Star Tribune: Felon sentenced to 23 years for home schemes (Former mortgage broker Michael Fiorito "will victimize" others again, the judge predicted):

• After much was said and done -- after he spent years blaming victims, filing motions and feigning various ailments -- Michael Fiorito turned to the only tactic he had left Thursday to avoid a long federal prison sentence. He started sobbing. It didn't work.

(1) The press release goes on to say that Fiorito was indicted on June 19, 2007, and was convicted by a federal jury on May 20, 2009, following a three-week trial. At sentencing, Judge Schiltz described Fiorito as a “troubled and dishonest” individual who is “incapable of empathizing” with his victims and who “refuses to accept responsibility” for his actions. Judge Schiltz went on to impose a prison sentence greater than called for under the U.S. Sentencing Guidelines. In doing so, he said, “Never before have I varied an upward sentence, but in this case, I find it justified because of the need to protect the public. I have no doubt that upon his release from prison, Mr. Fiorito will return to victimize others, and the sole way to limit that is to keep him locked up. He’s spent most of his life lying and stealing, and I do not believe it’s possible to deter him.”

(2) According to the press release, witnesses testified at trial that they were unaware they had signed documents granting Fiorito permission to handle their money. In addition, they often times failed to realize they had actually sold their homes to Fiorito. According to them, Fiorito routinely misrepresented the papers he gave them for signature, which led them, unknowingly, to award Fiorito power over their money and title to their property. Court documents also indicate that under certain circumstances, even after Fiorito had fraudulently acquired title to the homes of these unsuspecting people, he sent them monthly “mortgage” bills.