1st Circuit COA Affirms Conviction and Sentencing of Mortgage Rescue Scammer Michael Prieto For Operating A Fraudulent Mortgage Rescue Scheme
The 1st Circuit COA affirmed the conviction and sentencing of mortgage rescue scammer Michael Prieto. Prieto organized and managed a fraudulent mortgage rescue scheme.
Prieto for his role in the scheme in 2013. He targeted and solicited distressed homeowners through newspaper legal notices offering to bail them out from 2005 to 2008. He persuaded them to turn over the deeds to their homes. Prieto would then offer his victims for the opportunity to continue living in their homes as rent-paying tenants. He then gave them the option to purchase back their homes in two years.
Prieto quietly sold the homes at inflated prices to straw buyers whom he paid to file mortgage applications. These applications contained falsified income, assets, debts, and other facts. Prieto then stripped the equity from the homes and pocketed thousands of dollars. He would then spend the money at casinos.
A federal jury in New Hampshire convicted Prieto and sentenced him to 72 months in prison for mail fraud. Prieto’s crime grew out of the mortgage crisis in the mid and late 2000s. He used his experience working as a Loan Officer to defraud distressed homeowners.
Prieto Appeals His Conviction
The 1st Circuit COA rejected Prieto’s argument that the government improperly charged him with a single, overarching fraud count. The 1st Circuit COA concluded that the government’s single charge against Prieto was appropriate. The court also concluded the charge reflected the “multi-faceted [and] complex scheme” that Prieto devised.
The 1st Circuit COA also denied Prieto’s claim that the government had not presented sufficient evidence of Prieto’s intent to commit fraud. In this regard, the 1st Circuit COA concluded that “there was ample support to find that Prieto was both the conductor and a musician in an orchestrated fraud that worked for a while only because it was fraud.”
Finally, the panel of judges determined that there was sufficient evidence that the lies Prieto placed in mortgage applications were important to the bank’s decision to issue loans.
Prieto made misrepresentations about a mortgage applicant’s stated income and the planned use for the property (i.e., primary residence vs. investment property) that are important pieces of information to a bank because they have a natural tendency to influence a bank’s loan decision.
United States Attorney Rice remarked, “This was an important victory for the government. Individuals engaged in fraudulent mortgage rescue schemes took advantage of honest homeowners at their most vulnerable time. People like the defendant, who seek to leverage people’s economic distress into personal gain, must be held accountable. Prieto’s long sentence, which was affirmed by the Court of Appeals, will hopefully send a strong deterrent message that this kind of conduct will not be tolerated.”
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