The United States District Court has handed down two more sentences in two wide-ranging mortgage fraud schemes that affected New London County between 2004 and 2010.
David B. Fein, U.S. Attorney for the District of Connecticut, announced that 54-year-old Michael Hodges of New London and 30-year-old Kenneth Perkins of Groton were sentenced in Hartford today. Senior U.S. District Judge Alfred V. Covello sentenced Hodges to 18 months in prison with two years of supervised release, while Chief U.S. District Judge Alvin W. Thompson sentenced Perkins to eight years in prison with three years of supervised release.
Hodges was charged in a scheme spearheaded by Jose Guzman between 2004 and 2007. Guzman and others used mortgage brokerage, property management, and home improvement companies to have individuals buy properties, mostly residential sites in New London County. These individuals would fill out fraudulent mortgage application forms relating to income, employment and rent history, intent to make the property their primary residence, and other information to secure funding from mortgage companies and originators. These individuals were then compensated for their role in the scheme.
Fein said Hodges was unemployed when he participated in the fraud by acting as a buyer to purchase a property in New London in 2006 and another one in Norwich in 2007. Hodges also referred people to Guzman to act as buyers and recommended properties that could be purchased. He received $5,000 for each time he acted as a buyer as well as additional compensation when he recommended a buyer or property.
Investigators say over 200 fraudulent mortgages were funded as part of the scheme, resulting in a loss of over $9 million to lenders. Hodges pleaded guilty to one count of conspiracy to commit mail fraud and wire fraud on Oct. 12. As part of his sentence, he must forfeit $25,000 and pay $328,516.31 in restitution.
Fifteen other people, including Guzman, have been convicted on charges related to the fraud. Guzman has not yet been sentenced.
Perkins was convicted as part of a similar mortgage fraud scheme led by Syed Babar of New London between February of 2007 and April of 2010. Fein said Babar and others conspired to secure millions of dollars in real estate loans, including loans insured by the Federal Housing Administration, through fraudulent loan applications, property appraisals, and sales contracts.
Fein said Perkins acted as a buyer for about eight presidential properties in 2007, with seven located in Connecticut. He said Perkins knew that the prices on the sales contracts and closing documents were inflated in order to obtain loans higher than the prices agreed to by sellers, and that Perkins used fraudulent information on his loan application. Perkins also assisted the scheme by obtaining loans in the names of other buyers by creating additional fraudulent information supporting the loan applications, creating a bank account to receive some of the money, and working with an appraiser to create fraudulent appraisals to send to lenders to support loan applications.
Fein said about 30 mortgage transactions were completed and resulted in approximately $4.75 million in losses to lenders. Perkins pleaded guilty to one count of conspiracy to commit wire fraud on Oct. 1, 2010. As part of his sentence, he must also pay $4,180,565 in restitution.
Thirteen other people have been convicted of involvement in the scheme, and six have been sentenced to prison terms of between 30 and 90 months. Babar was to serve 120 months in prison.