Federal Jury Convicts Five Involved in Mortgage Fraud Ring

June 3, 2010 - BOSTON—Following a seven-week trial, a federal jury found five defendants guilty of mortgage fraud stemming from a scheme that involved 21 properties in the Greater Boston area, 10 mortgage lenders, and more than $10.6 million in loan proceeds.

United States Attorney Carmen M. Ortiz; Warren T. Bamford, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; Robert Bethel, Postal Inspector in Charge of the United States Postal Inspection Service, Boston Division; Susan Dukes, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation, Boston Field Division; Boston Mayor Thomas M. Menino; and Boston Police Commissioner Edward Davis, announced that ERIC L. LEVINE, 57, of Brookline; J. DANIEL LINDLEY, 62, of Jamaica Plain; ERNST APPOLON, 31, of Braintree; DANIEL APPOLON, 23, of Dorchester; and LATOYA HALTIWANGER, 28, of Los Angeles, were convicted of wire fraud and conspiring to commit wire fraud. LEVINE and LINDLEY were also convicted of money laundering.

“This type of greed and self-interest has directly contributed to the deterioration to many neighborhoods across the country,” said U.S. Attorney Ortiz. “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 exposed and brought to justice.”

Evidence at trial established that between May 2005 and June 2006, the defendants and others participated in a conspiracy to obtain $10.6 million in mortgage loan proceeds by fraud. Specifically, the scheme involved the use of inflated purchase prices and documents containing false statements about purchase price, borrower income, employment, or intent to reside in the property. The difference between purchase prices negotiated with sellers and inflated purchase prices submitted to lenders ranged from as little as $15,000 to as much as $255,000 on individual properties in South Boston, Dorchester, Jamaica Plain, Quincy, Hyde Park, and Cohasset, aggregating to more than $1.9 million. From this $1.9 million, the defendants and other coconspirators pocketed more than $1.7 million in illegal proceeds. The mortgages on all of the properties were defaulted upon and nearly all went into foreclosure.

LEVINE, a suspended attorney, and LINDLEY, a practicing attorney, participated in the loan closing process and handled the money. ERNST APPOLON, a real estate broker, identified properties for the conspirators, negotiated purchase prices with sellers, and recruited people to lend their names and credit information (“straw” borrowers) to obtain mortgage loans for property purchases. HALTIWANGER, a mortgage broker, was the loan originator for three of the properties in the conspiracy and was the “straw” borrower for a separate property purchase. DANIEL APPOLON recruited two “straw” borrowers whose name and credit information were used to purchase three properties.

The defendants face up to 20 years' imprisonment to be followed by three years of supervised release and a $1 million fine on each count of wire fraud. For the conspiracy, they face up to five years' imprisonment to be followed by three years of supervised release and a $250,000 fine. On the money laundering counts, LEVINE and LINDLEY face up to 10 years' imprisonment to be followed by three years of supervised release and a $250,000 fine.

Co-defendants ANDRE JUNIOR LAMERIQUE, WIDNER LAMARRE, JERMAINE BLAKE, SAMUEL JEAN-LOUIS and JEAN NORISCAT pled guilty to conspiracy to commit wire fraud and several counts of wire fraud. They each face a maximum of 20 years' imprisonment to be followed by three years of supervised release and a $1 million fine on each count of wire fraud. For the conspiracy, they face up to five years' imprisonment to be followed by three years of supervised release. NORISCAT also pled guilty to several counts of aggravated identity theft and faces a mandatory two years' imprisonment for each of the identity theft counts in addition to any other sentence imposed.

The defendants have been scheduled for sentencing as follows: LAMARRE and BLAKE, September 14, 2010; JEAN-LOUIS, September 16, 2010; LAMERIQUE and NORISCAT, September 21, 2010; LEVINE and ERNST APPOLON, September 22, 2010; LINDLEY, September 23, 2010; and DANIEL APPOLON and HALTIWANGER, September 29, 2010.

Co-defendant RALPH APPOLON is scheduled for trial in February 2011.

The case was investigated by the Federal Bureau of Investigation, United States Postal Inspection Service, and Internal Revenue Service, with assistance from the Boston Police Department. It is being prosecuted by Assistant U.S. Attorneys Victor A. Wild and Ryan M. DiSantis of Ortiz’s Economic Crimes Unit and Mary Murrane of Ortiz’s Asset Forfeiture Unit.

Mortgage fraud is a key focus of the Department of Justice who in November 2009 created the Financial Fraud Enforcement Task Force. The task force works to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.