A Worcester, Mass. grand jury indicted an Oxford, Mass. attorney and three accomplices late last week for a complicated scheme to defraud desperate homeowners facing foreclosure and mortgage lenders in real estate transactions involving distressed properties following an investigation by the office of Massachusetts Attorney General Martha Coakley.
Named in the indictments handed down September 28 were Allen Seymour, 41, and Raymond A. Desautels III, 43, both of Oxford; and Jason Passell, 51, and Judith Piette, 44, both of Worcester.
Seymour faces multiple counts of forgery, uttering, inducing a lender to part with property and larceny. Desautels, a former real estate lawyer, now disbarred, is facing multiple counts of inducing a lender to part with property; Passell, a real estate paralegal, is charged with forgery and multiple counts of uttering; and Ms. Piette, a notary public, faces multiple counts of filing a false written report by a public officer.
Seymour allegedly targeted properties in danger of foreclosure, approached property owners and presented a variety of rescue options. For those homeowners who wished to sell their property to avoid foreclosure, he allegedly offered to buy the property for the amount owed to the foreclosing lenders. For homeowners who wanted to remain in their homes, Seymour allegedly presented rescue plans that ranged from "lifetime leases" and "reverse mortgages" to a simple refinance. Some of these homeowners were told they would need to transfer title of the property to an "investor," and some were not.
Mr. Seymour allegedly had some homeowners sign innocuous documents to begin the process. These were allegedly discarded and pages purporting to grant power of attorney from the homeowner to Passell were substituted.
Simultaneously, Seymour allegedly found people with good credit who were looking to begin investing in real estate. Many of these investors were told they would be helping homeowners in danger of foreclosure by purchasing mortgages on the distressed homes. Seymour allegedly told several investors that the purchase would only be temporary, and the homeowners would buy the property back from them after he repaired the homeowners' credit. Others were allegedly told that Seymour's company would repair and rehab the properties, and then sell them at a profit, to be shared by Seymour and the investors. However, the investors were not told of the "lifetime leases" and "reverse mortgages" that Seymour allegedly had promised to the homeowners.
Investigators said they discovered that nearly $3 million in loans were obtained for these purchases. Loan documents indicate the lender believed the purchase price was far greater than the amount the homeowner was selling the property for, if in fact the homeowner knew he was selling the property at all.
Desautels conducted all of the real estate closings. The lender wired money into his legal business account based on the erroneous belief that the homeowner was selling the property for the inflated price.
The lender was unaware that the stated price was inflated. Authorities allege that on five occasions Desautels prepared documents indicating the investors had brought their own money to the closing table, further bolstering the lender's misunderstanding about the transaction and the purchase price.
Desautels allegedly issued a proceeds check payable to the homeowners, based on the false purchase price. Seymour and Passell, with both this check and the false power of attorney in hand, then allegedly cashed the check at a check cashing business in Worcester. The homeowners never attended these closings, because their documents were signed using a fraudulent power of attorney, authorities said. In roughly 18 months, authorities allege that Seymour cashed more than $1 million in checks.
After the closing, several investors said Seymour abandoned them to the mortgage payments. Without Seymour's assistance, the investors were unable to pay the loans, and these mortgages themselves fell into foreclosure. Some homeowners, promised lifetime leases, have been evicted from their homes by these foreclosures.
On four occasions, documents signed by the homeowner were presented to a notary public, Judith Piette. Although Piette never saw the homeowner, she allegedly signed these documents saying the homeowner had personally appeared before her and acknowledged they had signed the document voluntarily and for its intended purpose. There is no evidence Piette had any knowledge of the larger scheme.
Desautels has since been disbarred for his role in another scheme with Mr. Seymour in which he was charged by the U.S. attorney's office with wire fraud and misappropriating $1.9 million from a client's account. Mr. Desautels is scheduled to be sentenced in that case in U.S. District Court Oct. 29.
In connection with the same federal case involving Mr. Desautels, Mr. Seymour was sentenced in July to 51 months in prison and ordered to pay $2.94 million restitution to a man from Ireland whom he had swindled in a real estate deal. To avoid capture, Seymour allegedly took more than $1.3 million in stolen cash and attempted to flee to Venezuela in a private aircraft with his family. But federal agents using a cash-sniffing dog arrested him at Opa Locka Airport near Miami.
Arraignment dates in Worcester Superior Court have not yet been scheduled.
The case is being prosecuted by Assistant Attorneys General Andrew Doherty and David Lieberman of Attorney General Coakley's Corruption and Fraud Division. The case was investigated by Financial Investigator James McFadden and Massachusetts state troopers assigned to the attorney general's office, with assistance from the Worcester field office of the FBI.
From Real Estate Economy Watch