SPRINGFIELD, Mass., Sept. 23, 2004 LAWFUEL – Best criminal law, law, legal, attorney, law firm news & legal research Ten individuals were arrested
today on federal charges in connection with a mortgage fraud land flipping
scheme involving approximately 200 properties and $15 million in fraudulently
obtained loan proceeds.
United States Attorney Michael J. Sullivan; Kenneth W. Kaiser, Special
Agent in Charge of the Federal Bureau of Investigation; Joseph A. Galasso,
Special Agent in Charge of the Internal Revenue Service, Criminal
Investigation; and Peter Emerzian, Special Agent in Charge of the Department
of Housing and Urban Development, announced today that a federal Grand Jury
returned an indictment against ten individuals charging them with sixty-two
counts of wire fraud and one count of conspiracy to launder money arising out
of their participation in the multi-million dollar mortgage fraud scheme. The
indictment charges the following individuals with multiple counts of wire
fraud and conspiracy to launder money:
1) ALBERT INNARELLI, age 46, of 21B Castle Hill Road, Agawam, MA;
2) MICHAEL BERGDOLL, age 39, of 10 Beechwood Drive, Wilbraham, MA;
3) ANTHONY MATOS, age 31, of 27 Quail Hollow Road, Feeding Hills, MA;
4) PASQUALE ROMEO, age 65, of 89 Hall Street, Springfield, MA;
5) WILFRED CHANGASIE, age 50, formerly of Springfield, MA;
6) THEODORE JARRETT, age 47, of 37 George Street, Springfield, MA;
7) MARK MCCARTHY, age 40, of 19 Westwood Drive, Wilbraham, MA;
8) JAMES SMITH, age 27, of 713 Woodbine Street, Baltimore, MD;
9) JONATHAN FREDERICK, age 42, 88 Jennie Circle, Agawam, MA; and
10) JOSEPH SULLIVAN, age 27, 49 Gillette Circle, Springfield, MA.
According to the indictment, it is alleged that from the years 1998
through 2002, several of the defendants purchased distressed properties within
low-income neighborhoods and then re-sold the properties rapidly at
artificially inflated values. Individuals known as “runners” were used to
recruit prospective buyers and were paid finder’s fees for the successful sale
of property. The defendants induced prospective buyers by telling them that
they would not have to make any down payments as well as promising the buyers
that they would receive money back at the time of the real estate closing.
The prospective buyers were then referred to mortgage brokers who were
also involved in the land-flipping scheme. Since many of the prospective
buyers did not have the financial ability to qualify for loans, it is alleged
that the defendants generated and then processed false and fraudulent loan
applications and other documentation through various lending institutions to
obtain loans for the prospective buyers. The false documentation included
bogus down payment information, fraudulent income information, and false
documentation to show improvements to the properties that were never made. It
is alleged that the defendants then used appraisers involved in the scheme to
generate false and fraudulent appraisals to support the loan amounts for the
artificially inflated property values. In exchange for participating in the
fraud scheme, it is alleged that the mortgage brokers and appraisers received
not only continued business, but also “incentive” payments such as cash or
hidden interests in real estate deals.
Once the unwitting lending institutions approved the loan applications of
the prospective buyers, the prospective buyers were referred to attorney
INNARELLI as well as other attorneys. It is alleged that INNARELLI generated
false and fraudulent real estate closing documentation to facilitate and
conceal the fraud. It is alleged that in exchange, INNARELLI received not
only continued business, but also “incentive” payments such as cash or hidden
interests in real estate deals. INNARELLI received the loan proceeds from
various out-of-state lending institutions via wire transfer into a client
trust account he maintained and then disbursed the net profits from the
fraudulent real estate transactions by issuing checks out of that account to
the defendants.
“For most people owning a home is the fulfillment of the American dream,”
stated U.S. Attorney Sullivan. “To exploit such a dream is despicable. The
defendants are charged with preying upon inexperienced and unsuspecting home
buyers and lying to lending institutions to obtain loan proceeds for their
personal profit. Such activity can bankrupt lending institutions and ruin the
lives of buyers who unwittingly sign on to a mortgage they can not afford. The
U.S. Attorney’s Office, along with its law enforcement partners, is committed
to doing all in its power to protect the integrity of the mortgage lending
system and vulnerable consumers.”
According to the indictment, the defendants are alleged to have played the
following roles in the land-flipping scheme:
* INNARELLI served as the primary real estate attorney for the flipped
properties. According to the indictment, INNARELLI also stole money
intended to pay for the buyers’ real estate and utility taxes;
* BERGDOLL, MATOS and ROMEO purchased and sold real estate under a various
corporate names;
* CHANGASIE originally served as a runner, but later became a partner in
the “land-flipping” scheme;
* JARRETT, MCCARTHY and SMITH worked in the mortgage business and assisted
in finding financing for the prospective buyers;
* FREDERICK and SULLIVAN worked as appraisers.
SMITH was arrested today in Baltimore and will appear in federal court in
Maryland before being brought to Massachusetts. CHANGASIE, an illegal alien
from Guyana already in Immigration custody in Miami, Florida undergoing
deportation proceedings, will be transported to Massachusetts to appear in
federal court at a later date. The other eight defendants were all arrested
today in Massachusetts and will appear later today before a U.S. Magistrate
Judge. If convicted, the defendants each face a maximum term of imprisonment
of 30 years and a fine of $1 million for each wire fraud charge, and a maximum
term of imprisonment of 10 years and a fine of twice the amount of funds
involved in the money laundering conspiracy.
This case is the result of a joint investigation by the Federal Bureau of
Investigation, the Internal Revenue Service’s Criminal Investigation and the
Department of Housing and Urban Development. The case is being prosecuted by
Assistant U.S. Attorney William M. Welch, II in Sullivan’s Springfield office.
