Fraud probe into Dot properties nets convictions

A massive nationwide federal crackdown on mortgage fraud that involved dozens of properties in and around Dorchester has led to hundreds of arrests and several convictions, law enforcement officials say.

The initiative, dubbed “Operation Stolen Dreams,” includes 1,215 criminal defendants in cases that uncovered more than $2.3 billion in losses in Massachusetts, New Jersey, Detroit, Atlanta, and, in particular, the Haitian-American community in Miami.

In a statement, U.S. Attorney Carmen Ortiz said the results of the initiative highlight “the type of greed and self-interest that has directly contributed to the credit crisis and the deterioration of many neighborhoods here in Massachusetts and across the nation.”

A number of cases included Dorchester addresses, such as 162 Quincy St. Former mortgage broker Michael Hicks pleaded guilty in federal court to wire fraud and money laundering in relation to the address. Hicks, a Braintree resident, was sentenced in May to 42 months in jail.

Sometime in 2007, through a Pennsylvania associate, Hicks got a so-called straw buyer, someone who pretends to be buying a property legitimately but never intends to live there, to purchase three units at the address. In loan applications, Hicks falsely said the straw buyer would make the address his primary residence and created a fictitious business and income tax returns.

The units were sold by Michael Lee, whose case is still pending, according to the U.S. Attorney’s office. Hicks also set up a straw buyer for a multi-family home at 3-5 Sexton Court in Dorchester, which was owned by Lee’s in-laws. Lee paid Hicks $180,500 for the recruitment of the buyers, prosecutors said.
Lee received a $381,500 mortgage for the multi-family property and then converted it to condominiums, each of which he “sold” for $380,000 to the straw buyers, prosecutors allege. He is charged with wire fraud.

In another case, eleven defendants, including former attorney Eric Levine, closing attorney J. Daniel Lindley, real estate broker Ernst Appolon, and mortgage brokers Daniel Appolon and LaToya Haltiwanger, were convicted this month of conspiring to commit fraud in the sale of 21 properties. Six other defendants have pleaded guilty to related charges.

As in other cases, straw borrowers would buy the condominiums at inflated purchase prices and obtain mortgage loans in excess of purchase prices based on fraudulent documentation, prosecutors say.

The proceeds from the loans – ranging from $15,000 to $255,000 for properties in Dorchester, South Boston, Jamaica Plain, Quincy, Hyde Park, and Cohasset – were then divided among the defendants and straw buyers, prosecutors charge. The mortgage loans on the 21 properties totaled $10 million.
The sites in Dorchester included 5 Coleman St., 21 Mascot St., 67 Milton Ave., 19-21 Vera St., 60 Thetford Ave., 96 Thetford Ave., 7 Claridge Terrace, and 5 Holiday St. A Mattapan property, 48 Wood Ave., was also involved in the case.

The defendants have yet to be sentenced.

In another case highlighted by Ortiz’s office but still pending, straw buyers were allegedly recruited to buy nine properties, all in Dorchester. The two defendants are Dwight Jenkins and Eric Archambault.

“We are working to hold professionals criminally accountable in the mortgage industry, including attorneys and mortgage brokers, who participate in large-scale fraudulent schemes,” Ortiz said in the statement. “The bottom line is that mortgage fraud schemes make it more difficult for honest home owners to purchase and finance their homes, and to maintain stable communities. The U.S. Attorney’s Office and our law enforcement partners, are committed to ensuring that those in the real estate profession who exploit consumers for their own profit are brought to justice.”