(Source: RI Gov) – Colonel Steven G. O’Donnell, Superintendent of the Rhode Island State Police and Commissioner of the Department of Public Safety announces the arrest of two brothers involved in a $2,280,000 mortgage fraud scheme.
During August 2010, members of the Rhode Island State Police received information of a mortgage fraud scheme perpetrated by a Dr. Timothy E. O’Brien, age 55, of 42 Marine Road, South Kingstown, RI, and Eugene L. O’Brien, age 50, of 5 Third Street, Westport, Massachusetts. During an extensive one and one-half (1 ½) year investigation, State Police detectives revealed that the O’Brien brothers purchased the home and property located at 375 Ocean Road, Narragansett, RI, at an over-inflated price. As a result of this mortgage fraud, both Timothy and Eugene O’Brien were charged with 1) Obtaining Money under False Pretenses over $500 ($2,280,000), 2) Conspiracy to Obtain Money under False Pretenses, and 3) Money Laundering.
The investigation revealed that on September 11, 2006, Timothy and Eugene O’Brien had purchased the property for $2,400,000, when it was appraised at $910,000 and during a time when real estate prices in Rhode Island were declining. Land evidence records obtained from the Town of Narragansett revealed that on May 24, 2010, this property was foreclosed for $850,000 and later sold to an investor for $610,000. It was also learned that during November and December of 2006, Eugene O’Brien purchased three (3) properties and refinanced on the Ocean Road property without disclosing these fast occurring liabilities on his respective loan applications. Due to these misrepresentations, Eugene O’Brien fraudulently obtained approximately $3,496,000 of mortgage loans that resulted in over $2,180,900 in losses, not including unpaid city and town property taxes, lost interest payments, foreclosure costs and legal fees.
Detectives obtained closing documents from a law office involved in the purchase of 375 Ocean Road through a court-authorized search warrant. These documents revealed that on September 11, 2006, the financing for this purchase was obtained through Coastway Credit Union for $2,280,000. These documents further contained a Warranty Deed that was recorded at the Town of Narragansett that listed Timothy and Eugene O’Brien as the new owners of this property.
Closing documents revealed that on December 14, 2006, 375 Ocean Road was refinanced by Eugene O’Brien, and from these documents, detectives learned that Eugene O’Brien obtained a $1,920,000 mortgage loan and a $360,000 home equity loan. These loans paid off the existing loan for 375 Ocean Road. These documents also revealed that Timothy O’Brien’s name was removed from this property’s title through a “Quit Claim Deed” for $1.
Due to the previously mentioned foreclosure, Bank of America has incurred a loss of approximately $360,000 on the home equity loan. The mortgage loan of $1,920,000 was sold by Bank of America (Countrywide Home Loans) to Franklin Bank SSB, and subsequently caused Franklin to incur that loss. Furthermore, Franklin SSB has since filed for bankruptcy and is no longer a going concern.
During this investigation, detectives discovered numerous false and misleading documents. The investigation further revealed that Eugene O’Brien has over $600,000 in Federal and State Tax Liens levied upon him.
Despite all these negative factors, Eugene O’Brien netted approximately $96,000 from the purchase of 375 Ocean Road and obtained these funds by negotiating his payout by purchasing personal and/or third party cashier checks. Eugene O’Brien would then negotiate these checks on different dates and withdraw under $10,000 in cash in order to conceal these profits from Federal and State Tax Agencies. Detectives further learned that Dr. Timothy O’Brien netted $100,000 for using his good name and credit score in order to obtain the initial Coastway Credit Union mortgage loan. Timothy and Eugene O’Brien garnered these large payouts even though the value of 375 Ocean Road never increased during the purchase and/or after the refinancing. Furthermore, Dr. Timothy O’Brien contributed only $78.00 towards this purchase and Eugene O’Brien contributed no identifiable funds.
The investigation is continuing.
Contact: Lieutenant Michael J. Winquist, Assistant Detective Commander, Telephone: (401) 444-1128
SOURCE: RI GOV