Four, Including Groton Man, Sentenced In Mortgage Fraud Scheme

Four people, including one from Groton, involved in an extensive mortgage fraud scheme led by a New London man were sentenced on Friday in federal court.

David B. Fein, United States Attorney for the District of Connecticut, said Chief U.S. District Judge Alvin W. Thompson sentenced an attorney and three "straw buyers" in Hartford.

Sentenced on Friday were 29-year-old Wilson Nicolas, of Groton; 26-year-old Lisa Depa, of Middletown; 25-year-old Alicia Martineau, of West Haven; and 49-year-old Richard Novak, of Middletown.

The individuals were accused of involvement in a plot by Syed Babar of New London to fraudulently obtain residential real estate loans through false loan applications, property appraisals, and sales contracts.

The scam ran between February of 2007 and April of 2010 and involved about 30 transactions, including loans insurance by the Federal Housing Administration. Investigators estimate that the fraud resulted in about $4.75 million in losses to lenders.

Babar was to serve 10 years in prison. Six other participants have received prison sentences of betweeen 30 and 90 months.

Fraudulent documents

Novak was an attorney who represented the seller of a residence at 97 Bradford Ave. in East Haven. He also held the power of attorney for this person and previously lived in the residence. Novak signed a Department of Housing and Urban Development settlement statement on June 4, 2008, as part of the closing for the property.

Fein said Novak knew this document included a number of false statements, including an overstatement on the amount required to pay off a second property lien, an assertion that the buyer made a $22,000 deposit when no such payment was made, the false claim that $48,345.62 was owed to "Sheda Telle Construction" for an "outstanding invoice," and the statement that $6,140 in seller's funds would go toward paying off "GE Money Bank for PMSI in appliances" when this payment was not required.

Fein said Sheda Telle Construction was a fake company to which Babar and other conspirators could divert proceeds from the scheme. The property at 97 Bradford Ave. later went into foreclosure.

Novak was sentenced to five years of probation and ordered to pay $145,000 in restitution.

Straw buyers

Fein said Martineau acted as a straw buyer, allowing conspirators to use her name and identifying information to buy properties at inflated prices. Using false information about her employment, assets, liabilities, and intent to make the property her primary home, Martineau purchased a residence at 211 Lloyd Street in New Haven on Oct. 1, 2009.

The purchase was made with an FHA-insured loan and bought at the inflated place of $160,000. Martineau received $10,000 in cash in a black plastic bag for her role in the purchase.

"The house was in extremely poor condition both before and after Martineau purchased it, she had no intention of ever living at the property and she never received keys to the residence," said Fein. "Martineau did not make any mortgage payments and the property later went into foreclosure."

Martineau pleaded guilty to one count of conspiracy to commit wire fraud on Jan. 31, 2011. She was sentenced to six months in prison with three years of supervised release, and must also pay $102,181.28 in restitution.

Fein said Nicolas also served as a straw buyer to purchase two properties in New Haven in 2008. Nicolas worked with Babar and other conspirators to obtain FHA-insured loans via fraudulent information and purchased a property at 243 Starr Street for $175,000 and another at 88 Hazel Street for $180,000. Nicolas also never occupied either residence and later defaulted on the loans.

"Babar had instructed Nicolas to open a joint bank account with an individual whom Nicolas did not know in order to give the appearance Nicolas had access to more money than he actually had," said Fein. "The loan applications also falsely represented where the defendant worked. After the closings, Nicolas received $40,000 in cash from a co-conspirator and later returned $8,000 to the co-conspirator to be used in another real estate transaction."

Nicolas pleaded guilty to one count of conspiracy to commit wire fraud on Feb. 4, 2011. He was sentenced to three months in prison and three years of supervised release, and must pay $271,706.24 in restitution.

Depa purchased two houses in New Haven in 2008 at fraudulently inflated prices. She bought one at 39 Lilac Street for $183,000 and another at 433 Shelton Street for $249,000. Fein said Depa registered a fake company with the Connecticut Secretary of State and joined a bank account held in the name of a co-conspirator, receiving $40,000 in cash from this person after closing the sales. Depa never occupied either home and defaulted on the loans.

Depa pleaded guilty to one count of conspiracy to commit wire fraud on Jan. 28, 2011. She was sentenced to five years of probation and must pay $328,688.11 in restitution.

Investigation

The case is being investigated by the Federal Bureau of Investigation and the Department of Housing and Urban Development - Office of Inspector General. Assistant U.S. Attorneys Eric J. Glover, Susan Wines, and Liam Brennan are prosecuting the case. Thirteen people have been convicted in connection to the scheme.

Residents may report suspected mortgage fraud to the Connecticut Mortgage Fraud Task Force, which includes representatives from several federal and state law enforcement and financial entities. The task force may be contacted at 203-333-3512 or ctmortgagefraud@ic.fbi.gov.