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A Lynn accountant pleaded guilty yesterday in federal court in Boston to assisting in a multi-year mortgage fraud scheme by creating fraudulent tax returns and submitting fraudulent letters to lenders.
David Plunkett, 53, of Lynn, pleaded guilty to one count of bank fraud and one count of aiding in the submission of false tax returns.
George Kritopoulos, 46, of Salem, one of the alleged leaders of the mortgage fraud scheme, was indicted in September 2018, and has pleaded not guilty. Co-conspirator Joseph Bates III, 38, of Lynnfield, pleaded guilty in October 2018 to one count of conspiracy, three counts of wire fraud affecting a financial institution and two counts of bank fraud.
Bates and others engaged in a scheme to defraud banks and other financial institutions by causing false information to be submitted to those institutions on behalf of borrowers located primarily in Salem from 2006 through 2015.
The properties were usually multifamily buildings with two to four units, which the co-conspirators then converted into condominiums. The co-conspirators recruited other borrowers to purchase the individual condominium units, which were also financed by fraudulent mortgage loans.
The false information submitted to lenders included, among other things, representations concerning the borrowers’ employment, income, assets and intent to occupy the property. Specifically, the false employment information included representations that borrowers were employed by entities that were, in fact, shell companies used to advance the fraudulent scheme.
The employment information included false representations about the income that the borrowers received from the entities, when, in fact, the borrowers received little or no income from them. Furthermore, the income asserted on the borrowers’ loan applications substantially overstated their true income. The false information also included representations that the recruited borrowers intended to live in the properties that they were purchasing, when the borrowers, in fact, did not intend to do so.
Plunkett assisted the scheme by preparing tax returns for some of the borrowers that contained false and inflated income. Some of those tax returns were submitted to lenders in support of the fraudulent loan applications. Plunkett also signed letters falsely representing that his CPA firm had prepared corporate tax returns for one of the shell entities, when in fact no such returns had ever been prepared or filed.
Because the borrowers did not have the financial ability to repay the loans, in many instances, they defaulted on their loan payments, resulting in foreclosures and millions of dollars of losses to the financial institutions.
Plunkett’s sentencing is scheduled for June 25, 2019.
