Criminal Justice News

Thursday, May 17, 2012

Former Attorney Pleads Guilty to Fraud and Money Laundering

Former Mortgage Attorney’s Ponzi Scheme Defrauded Banks and Customers of More Than $600,000

PROVIDENCE, RI—A former Rhode Island and Massachusetts mortgage attorney pleaded guilty in U.S. District Court in Providence today to defrauding mortgage holders and lending institutions of more than $600,000. David L. Spector, 52, of Needham, Massachusetts, admitted that he used the funds to operate a Ponzi scheme. Spector’s guilty plea was announced United States Attorney Peter F. Neronha.

Spector pleaded guilty to three counts of wire fraud and one count of money laundering. He faces up to 70 years in federal prison, followed by up to three years of supervised release, and a fine of up to $1,000,000 when he sentenced by U.S. District Court Judge John J. McConnell, Jr. on August 8, 2012.

Spector admitted to the court that between April and October 2007, he conducted real estate mortgage refinance closings for properties in Plymouth and Lawrence, Massachusetts and Westerly, Rhode Isladn. As part of the closing process, Spector had the proceeds of the mortgages obtained by his clients transferred to his attorney escrow account for the purpose of redistributing the funds to pay off existing mortgages and other costs associated with the closings.

Spector admitted that rather than properly distribute the funds, he used $601,962 to run a Ponzi scheme to pay his personal expenses and to pay off previous mortgages the he had failed to pay off. Spector admitted that in order to keep his victims from learning of his scheme, he filed change of address forms with the mortgage companies that had not been paid off so that the bills would go to a post office box that he controlled.

The case is being prosecuted by Assistant U.S. Attorney Luis M. Matos.

The matter was investigated by Rhode Island State Police, Federal Bureau of Investigation, and Internal Revenue Service, Criminal Investigation.

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