An Oxford, Mass. man has been sentenced to Massachusetts State Prison after pleading guilty in Worcester Superior Court for his role in a complex scheme in which fraudulent documents were used to defraud homeowners and mortgage lenders in numerous real estate transactions involving distressed properties in the Worcester County area, Attorney General Martha Coakley’s Office announced.
Allen Seymour has plead guilty to charges of forgery (four counts), uttering (eight counts), inducing a lender to part with property (12 counts), and larceny by false pretenses. After the change of plea, Superior Court Judge James R. Lemire sentenced Seymour to serve two years to two and a half years in state prison, followed by five years of probation. Seymour’s sentence will begin following the completion of a federal prison sentence on an unrelated matter. Judge Lemire also ordered Seymour to pay restitution in the amount of $750,000 to the victims. While on probation, Seymour is prohibited from working in the real estate industry.
Two other co-defendants have been sentenced in connection with this case. On Dec. 1, 2009, former lawyer Raymond A. Desautels III of Oxford, Mass. was sentenced to serve two years in prison after pleading guilty to the charges of inducing a lender to part with property (five counts). On Jan. 13, 2010, former notary public Judith Piette of Worcester, Mass. plead guilty to the charge of false written report by public officer (four counts). Piette was ordered to serve two years of probation.
The charges are the result of the second phase of a two-year investigation stemming from a referral from the Massachusetts Division of Banks. The first phase of the investigation covered the alleged creation of fraudulent Verifications of Deposit, a document used to prove a borrower’s assets to a lender. Phase one of the investigation led to indictments of five individuals, including mortgage broker Erik Tancun, on a variety of charges stemming from the alleged creation of these false documents. Tancun plead guilty to these charges and will be sentenced in Worcester Superior Court on Dec. 21, 2010.
The second phase of the investigation focused on 14 real estate transactions in the Worcester County area. Massachusetts State Police and financial investigators assigned to the Attorney General’s Office uncovered a scheme, organized by Seymour, whereby Seymour was able to transform apparent equity in distressed properties into cash.
According to authorities, Seymour targeted properties in danger of foreclosure. He personally approached the owners of these properties and presented a variety of rescue options. For those homeowners who merely wished to sell their property to avoid foreclosure, Seymour offered to purchase the property for the amount owed to the foreclosing lenders. For the several homeowners who wanted to remain in their homes, Seymour presented rescue plans which 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. Seymour had some homeowners sign innocuous documents to begin the process. These innocuous pages were then discarded and substituted with pages purporting to grant Power of Attorney from the homeowner to an associate of Seymour.
Simultaneously, Seymour found individuals 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. Seymour told several investors that the purchase would only be temporary, and the homeowners would purchase the property back from them after Seymour repaired the homeowner’s credit. Others were 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.
None of the proposals made to these “investors” matched the transactions presented to the homeowner. The investors were not told of the “lifetime leases” and “reverse mortgages” Seymour had promised to the homeowners.
Investigators discovered that nearly $3 million dollars 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 they were selling the property at all.
Raymond Desautels III conducted all of the real estate closings. The lender wired funds 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 in fact inflated. DeSautels pled guilty to charges in connection with five of the closings. In these five transactions, Desautels falsely prepared documents indicating the investor had brought their own funds to the closing table, further bolstering the lender’s misunderstanding about the transaction and the purchase price. The homeowners never attended these closings, as their documents were allegedly signed using a fraudulent Power of Attorney.
Desautels issued a proceeds check payable to the homeowners, based on the false purchase price. Seymour, with both this check and allegedly false Power of Attorney in hand, then cashed the check at a check cashing business in Worcester. In a roughly 18-month time period, authorities allege that Seymour cashed well over $1 million dollars in proceeds checks.
After the closing, several investors stated that 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 notary public Judith Piette. Although Piette never saw the homeowner, Piette signed these documents stating 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.
On Sept. 25, 2009, a Worcester County Grand Jury returned indictments against all of the defendants. On Aug. 14, 2010, Seymour was arraigned in Worcester Superior Court, pled not guilty and was ordered held without bail. Seymour has plead guilty to all charges and was sentenced.
The case was prosecuted by Assistant Attorney General Andrew Doherty of Attorney General Coakley’s Corruption and Fraud Division. The case was investigated by Financial Investigator James McFadden and Massachusetts State Police assigned to the Attorney General’s Office, with assistance from the Worcester field office of the Federal Bureau Investigation (FBI).
For more information, visit www.mass.gov.