A real-estate attorney was sentenced today in connection with a sweeping conspiracy to defraud banks and mortgage companies by engaging in sham short sales of residential properties in Merrimack Valley, Mass., near Boston.
Jasmin Polanco, 37, of Methuen,Mass., was sentenced by Douglas Woodlock, senior district court judge, to 15 months in prison, three year of supervised release and ordered to pay $1.2 million in restitution. In March 2018, Polanco pleaded guilty to one count of conspiracy to commit bank fraud.
[caption id="attachment_5419" align="alignleft" width="157"]
Douglas Woodlock
Senior District Court Judge[/caption]
Co-defendants Vanessa Ricci, 41, also of Methuen, a mortgage loan officer, pleaded guilty in March 2018 to one count of conspiracy to commit bank fraud and was sentenced to six months in prison, three years of supervised release and ordered to pay restitution of $963,730. Greisy Jimenez, 50, Methuen, a real-estate broker, pleaded guilty to two counts of bank fraud and one count of conspiracy to commit bank fraud and is awaiting sentencing. Hyacinth Bellerose, 51, of Dunstable,Mass., a real estate closing attorney, was sentenced in March 2017 to time served and one year of supervised release to be served in home detention after pleading guilty to conspiracy to commit bank fraud. The conspiracy began in approximately August 2007 and continued through June 2010, a period that included the height of the financial crisis and its aftermath.
The charges arose out of a scheme to defraud various banks through bogus short sales of homes in Haverhill, Mass., and Lawrence, Mass., as well as Methuen in which the purported sellers remained in their homes with their debt substantially reduced. A short sale is a sale of real estate for less than the value of the existing mortgage on the property.
Short sales are an alternative to foreclosure that typically occur when the mortgage lender consents; the lender absorbs a loss on the loan and releases the borrower from the unpaid balance. By their very nature, short sales are intended to be arms-length transactions in which the buyers and sellers are unrelated, and in which the sellers cede their control of the subject properties in exchange for the short-selling bank’s agreement to release them from their unpaid debt.Home values in Massachusetts and across the nation experienced a significant decline, and many homeowners found themselves with homes worth less than the mortgage debt they owed.
As part of the scheme, Polanco, Jimenez, Ricci, Bellerose and others submitted materially false and misleading documents to numerous banks in an effort to induce them to permit the short-sales, thereby releasing the purported sellers from their unpaid mortgage debts, while simultaneously inducing the purported buyers’ banks to provide financing for the deals. In fact, the purported sellers simply stayed in their homes, with their debt substantially reduced.
The conspirators led banks to believe that the sales were arms-length transactions between unrelated parties, which was false; in fact, the buyers and sellers were often related, and the sellers retained control of (and frequently continued to live in) the properties after the sale. The conspirators also submitted phony earnings statements in support of loan applications that were submitted to banks in order to obtain new financing for the purported sales.
In addition, the defendants submitted phony “HUD-1 Settlement Statements” to banks that did not accurately reflect the disbursement of funds in the transactions. (HUD-1 Settlement Statements are standard forms that are used to document the flow of funds in real estate transactions, and they are required for transactions involving federally related mortgage loans, including all mortgages insured by the Federal Housing Administration.
United States Attorney Andrew E. Lelling; Christina Scaringi, Special Agent in Charge of the Department of Housing and Urban Development, Office of Inspector General, New York Field Office; and Christy Goldsmith Romero, Special Inspector General of the Troubled Asset Relief Program, made the announcement. Assistant U.S. Attorney Stephen E. Frank, Chief of Lelling’s Economic Crimes Unit, and Assistant U.S. Attorneys Sara Miron Bloom and Victor A. Wild, also of the Economic Crimes Unit, prosecuted the cases.
