Local condo developer faces federal fraud, money laundering charges

A federal grand jury has indicted Michael David Scott, who bought and sold condos in Dorchester and Roxbury, on charges he defrauded mortgage lenders by arranging the sale of condos to "straw buyers" who had no intentions of living in the units.

The indictment alleges Scott bought several multi-family buildings in the two neighborhoods, then arranged for their "purchase" by straw buyers who had no intention of living in them, but who got mortgages using bogus purchase prices and then split the profits with Scott.

In a statement, the US Attorney's office in Boston says:

"Scott and his associates bought multi-family dwellings promising to convert them into condominiums, and then resold the individual units to various straw buyers. Scott arranged for the buyers to obtain mortgage financing by falsifying key information, such as the buyers' income, assets, downpayment and residence. In most instances the buyers obtained residential mortgage loans for properties that they never intended to live in. While the lenders (mortgage companies and one bank) were led to believe they were lending to residential purchasers, Scott recruited buyers by representing the purchases to them as a no-money-down 'investment' opportunity. The 'investors' were assured that they would not have to make any down payments, pay any closing costs, or pay expenses relating to the maintenance of the units, but would share in profits when the units were sold.

Scott, a 44-year-old Mansfield resident, was indicted on 28 counts of wire fraud, 12 counts of bank fraud and 22 counts of money laundering.

The indictment against him alleges he used 30 different straw buyers to apply for mortgages in the buildings, which include:

Address Purch. date Purch. price
78-80 Granger St. 12/27/06 $504,000
365 Centre St. 8/10/07 $460,000
81 Spencer St. 6/8/07 $250,000
10 Navillus Terrace 9/27/07 $469,200
5 Parkman St. 9/21/07 $790,000
3 Parkman St. 10/10/07 $700,000
7 Parkman St. 10/12/07 $690,000
672 Adams St. 4/25/08 $435,000

The indictment against Scott.