A man was sentenced in federal court for a mortgage fraud scheme involving at least two dozen fraudulent loan transactions and over $4 million in losses to lenders.
Joseph Bates III was originally charged in September 2018 along with co-defendants George Kritopoulos and David Plunkett. In October 2022, Kritopoulos was sentenced to four years in prison and two years of supervised release after being convicted by a federal jury of one count of conspiracy, two counts of wire fraud, six counts of bank fraud, one count of aiding the preparation of a false income tax return and one count of obstruction of justice.
In February 2019, Plunkett pleaded guilty to one count of bank fraud and one count of aiding in the submission of false tax returns.
Starting in 2006, for nine years Bates, Kritopoulos 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 who were recruited to purchase properties by the defendants. The properties were usually multi-family buildings with two-to-four units, which the co-conspirators then converted into condominiums. Together, Kritopoulos and Bates created and provided false documents to defraud lenders for financing the purchases. Kritopoulos also recruited Plunkett to prepare false tax returns in support of the fraud scheme.
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 “owned” by Kritopoulos and were used to advance the fraudulent scheme. The employment information also included false representations about the income that the borrowers received from the entities, when the borrowers actually received little or no income from them.
Because the borrowers did not have the financial ability to repay the loans, in all but two instances among 21 properties, they defaulted on their loan payments, resulting in foreclosures and losses to the lenders.
In October 2018, Bates pleaded guilty to one count of conspiracy, three counts of wire fraud affecting a financial institution, and two counts of bank fraud. Bates was sentenced to 18 months in prison and three years of supervised release. He was also ordered to pay restitution in the amount of $2,238,354 and forfeiture of $700,000.