Rhode Island Real Estate Attorney Pleads Guilty to Eight Counts of Bank Fraud Netting More Than $1.7 Million

PROVIDENCE, RI (LoanSafe.org) —Christopher B. Maselli, a North Providence real estate attorney and former state senator from Johnston, pled guilty Wednesday in U.S. District Court in Providence to eight counts of bank fraud. Maselli pled guilty to an information filed by the government on October 26, alleging that he falsified bank and federal tax documents and lied about his income and assets in obtaining more than $1.7 million in mortgages and loans. Mr. Maselli pled guilty as charged in the information. There is no plea agreement between Mr. Maselli and the government.

The guilty plea, which was entered before U.S. District Court Chief Judge Mary M. Lisi, was announced by U.S. Attorney Peter F. Neronha; Richard DesLauriers, Special Agent in Charge of the FBI’s Boston Field Office; and Michael Stephens, Acting Inspector General of the HUD Office of Inspector General.

U.S. Attorney Peter Neronha commented, “I am gratified that former Senator Maselli has now accepted responsibility for engaging in a wide-ranging, criminal bank fraud scheme. As I stated when Mr. Maselli was first indicted, this case is particularly disturbing because an attorney, who is trusted to provide sound legal advice and to conduct real estate transactions in a fair and honest manner, used his expertise to fraudulently obtain his own mortgages. Whether the victimized banks ultimately suffered a loss is irrelevant. What matters is that Mr. Maselli’s fraudulent manipulation of the mortgage process exposed them to loss.”

At Thursday’s change-of-plea hearing, Assistant U.S. Attorney Dulce Donovan told the court that beginning in June 2007, Maselli applied for a series of loans, primarily mortgage loans, from several federally insured banks. In order to qualify for those loans, the defendant lied about his income and assets and produced fabricated documentation including false tax returns and bank statements to support his misrepresentations regarding his income and assets. In all but one instance, the banks relied on the defendant’s false statements in approving him for the loans. Ms. Donovan detailed for the court how each of the eight mortgages or loans was obtained and the various schemes employed by Mr. Maselli to gain bank approval.

Assistant U.S. Attorney Donovan told the court that Maselli commenced his schemes on May 27, 2007, when the defendant and his wife signed a purchase and sale agreement to buy land and a home on Pinehill Avenue in Johnston for $200,000. Maselli intended to demolish the existing structure and build a home. The defendant used his wife’s elderly grandmother as a straw borrower and applied for two mortgages in her name, totaling $200,000. The defendant’s wife’s grandmother was falsely told that she would be cosigning the loan with the defendant’s wife and that her name would be removed from the mortgage within three months of the purchase. Instead, the loan applications Maselli submitted to the bank were submitted with the wife’s grandmother named as the sole applicant and the loans were issued in her name only.

In order to deceive the bank into thinking that his wife’s grandmother was the true purchaser of the property and the true borrower, the defendant created numerous false documents relating to his wife’s grandmother and submitted false information on the loan applications concerning the grandmother, her income and assets. Maselli never removed the grandmother’s name from the mortgage and a week after the closing the defendant completed a deed transfer which transferred her ownership in the property to him.

Ms. Donovan told the court that in each of the seven subsequent instances of applying for and obtaining mortgages and loans, the latest which was obtained in March 2009, Mr. Maselli employed schemes where he lied about his income and assets and produced fabricated documentation including false tax returns and bank statements to support his misrepresentations regarding his income and assets. In each instance, the banks relied on the defendant’s false statements and false documents in approving the loans.

Michael Stephens, Acting Inspector General of the HUD Office of Inspector General commented, “Mortgage fraud and white-collar crimes strike at the economic heart of the American system. To the extent that we can uncover and prosecute these activities, it’s to everyone’s benefit. Accordingly, I am happy to lend the HUD Office of Inspector General’s nationwide expertise to this exceptional group of law enforcement agencies.”

Richard DesLauriers, Special Agent in Charge of the FBI’s Boston Field Office said, “The FBI and HUD work collaboratively to investigate these crimes. We use a variety of investigative and analytical techniques to identify those who engage in mortgage fraud. Today’s guilty plea demonstrates our commitment to hold real estate professionals who are entrusted with maintaining the integrity of the mortgage process accountable for their unlawful acts. We will continue to track down and bring to justice all perpetrators of mortgage fraud.”

Sentencing has been scheduled for February 10, 2011. Bank fraud is punishable by a maximum sentence of 30 years’ imprisonment, a $1,000,000 fine, and five years’ supervised release.

The matter was investigated by the Federal Bureau of Investigation; U.S. Department of Housing and Urban Development, Office of the Inspector General; and the Internal Revenue Service, Criminal Investigations.