Mortgage Fraud Scheme- Real Estate Developer in Massachusetts Sentenced to Prison
A Salem, real estate developer was sentenced to four years in prison today for a decade-long mortgage fraud operation involving at least two dozen loan transactions totaling $6.5 million and resulting in over $3.8 million in damages to lenders.
U.S. District Court Judge Patti B. Saris sentenced George Kritopoulos, age 50, to four years in prison followed by two years of supervised release. The judge withheld judgment about a restitution order. A federal jury convicted Kritopoulos of one count of conspiracy, two counts of wire fraud, six counts of bank fraud, one count of assisting in the preparation of a false income tax return, and one count of obstruction of justice on May 27, 2022.
In September 2018, Kritopoulos, along with co-defendants Joseph Bates III and David Plunkett, was initially accused. In October 2018, Bates pled guilty to one count of conspiracy, three counts of wire fraud against a financial institution, and two charges of bank fraud. His sentencing is slated for December 1, 2022. In February 2019, Plunkett pled guilty to one count of bank fraud and one count of assisting in the preparation of fraudulent tax returns. His sentencing is slated for December 14, 2022.
A mortgage fraud scheme that was a decade-long
From 2006 through 2015, Kritopoulos, Bates, and others participated in a plan to defraud banks and other financial institutions by submitting fraudulent information on behalf of borrowers – individuals solicited to acquire houses – mostly situated in Salem. The properties were typically two- to four-unit multifamily structures, which the conspirators turned into condos. Kritopoulos solicited additional borrowers to acquire condominium units that were also financed by fraudulently obtained mortgage loans.
Among the misleading information provided to lenders were statements on the borrowers’ job, income, assets, and desire to inhabit the property. Specifically, the false employment information included claims that borrowers were employed by firms that were, in fact, shell corporations “owned” by Kritopoulos and utilised to further the fraudulent scheme.
Fraudulent Loan Applications Through Tax Returns
Additionally, the job information contained inaccurate representations of the revenue that the borrowers got from the entities, whereas in reality they received little or no income from them. Kritopoulos introduced freshly recruited debtors to Plunkett, who subsequently prepared fake and exaggerated tax returns. Some of these tax returns were used to support fraudulent loan applications made to lenders.
Kritopoulos also attempted to hinder the federal criminal investigation into the mortgage fraud scheme by persuading Bates and Plunkett to make false statements and manufacture phoney papers so that the firms would seem genuine.
The announcement was made today by United States Attorney Rachael S. Rollins, Joseph R. Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigation, Boston Division, Joleen D. Simpson, Special Agent in Charge of the Internal Revenue Service – Criminal Investigation Division, Boston Office, and Christina Scaringi, Special Agent in Charge of the U.S.
Department of Housing and Urban Development, Office of Inspector General, Northeastern Regional Office. The Salem Police Department rendered invaluable support. The case was prosecuted by Assistant U.S. Attorneys Victor A. Wild and Brian M. LaMacchia of Rollins’ Securities, Financial & Cyber Fraud Unit and Affirmative Civil Enforcement Unit, respectively.