Exbank manager, recruiter charged in Boston loan case

A former Bank of America Corp. branch manager and a Virginia-based real estate recruiter were charged with wire fraud in federal court in an unfolding case of an alleged long-running mortgage fraud scheme that led to foreclosures and abandoned buildings in Dorchester and Roxbury, the US attorney’s office confirmed yesterday.

 

Arthur Samuels, a former manager at Bank of America’s Fields Corner branch in Dorchester, was charged in the case involving Michael David Scott, a Mansfield developer indicted last week on 62 counts of wire fraud, bank fraud, and money laundering in connection with the sale of about three dozen condominiums between 2006 and 2008.

 

Jerrold Fowler of Norfolk, Va., also was charged with wire fraud for his alleged role as a recruiter for investors — many of them out of state — who participated in the alleged scheme to defraud lenders. In Scott’s indictment, prosecutors said he worked with “associates,’’ but they were not identified. The federal charges against Samuels and Fowler were filed separately in US District Court and made public this week.

 

Rudolph Miller, a lawyer for Samuels, said his client “maintains his innocence and he is looking forward to his day in court.’’ James Budreau, Fowler’s lawyer, declined to comment. Neither Scott nor his lawyer, William Kettlewell, could be reached for comment.

 

The charges come more than eight months after a Globe story reported allegations that Scott, 44, led a team of partners to defraud mortgage lenders through the conversion of at least 50 buildings into about 170 condos in some of the city’s poorest neighborhoods.

 

Scott’s deals, often driven by the same group of key players, involved selling condos to local and out-of-state investors, many of whom later said they were duped. Some units sold at market prices, but never were made livable. More than 100 eventually went into foreclosure.

 

Samuels and Scott also were named in a lawsuit by Bank of America last year in Suffolk Superior Court for their alleged involvement in a scheme to defraud the lender of $1.5 million in what bank officials believed was an inside job. The civil case is still pending. Bank of America officials declined to comment on the criminal charges.

 

In written affidavits filed in federal court this week, Amy Z. Diamond, an FBI agent, said that Scott, Samuels, Fowler, and others recruited “straw buyers’’ — people who bought properties with fraudulently acquired mortgages. In most cases, she wrote, buyers had no money invested in the deals, did not plan to live in the homes, and could not afford to make mortgage payments.

 

Diamond said Scott, Fowler, Samuels, and others paid people to purchase condominiums, promised them they didn’t have to invest in the sale, said mortgage payments would be paid for by tenants, and told them they would share in profits when the properties were resold. The criminal complaint also alleged the group “falsely inflated purchase prices,’’ incorrectly said buyers would live in the homes, and falsely claimed investors’ personal assets.

 

Samuels’s role involved creating false documents to support loan applications, according to the FBI affidavit. He also helped recruit another investor and bought several properties “that were part of the scheme to defraud,’’ the FBI said.

 

Fowler recruited investors and also bought a Roxbury property, the affidavit said.

 

Scott is scheduled to appear before a federal judge Sept. 13. Court dates have not been set for Fowler or Samuels.

 

Scott is seeking Chapter 7 bankruptcy. Warren Agin, the trustee in charge of the bankruptcy proceedings, filed a complaint in May in US Bankruptcy Court objecting to the move. In court documents, Agin alleged Scott has attempted to defraud creditors by hiding property, lying, and withholding information.

 

Agin said this week he has not been in contact with the US attorney’s office in Boston but was not surprised by the indictment. “The claims made in the indictment are consistent with what we have learned through our own investigation,’’ he said.

 

News of the criminal charges was applauded by some investors who believe they were victims in the mortgage fraud scheme.

 

“I’m happy he is indicted,’’ David Brown, 28, of Chesapeake, Va., said yesterday. Brown said Scott asked him to buy a Dorchester condo for $425,000 in 2006 with a mortgage he had no ability to cover. The condo eventually went into foreclosure. “I hope justice is served,’’ he said of Scott.

 

“He clearly committed criminal fraud,’’ said Framingham lawyer Evans Carter, who represented a Virginia couple who sued Scott and his partners in Middlesex Superior Court in 2008 saying they were defrauded. Carter said the civil case against Scott was suspended after he filed for bankruptcy.

 

“You can’t say you completed a building, when you’ve done nothing,’’ he said.

 

Jenifer B. McKim can be reached at jmckim@globe.com.

 

© Copyright 2010 Globe Newspaper Company.

 

Published on 06/09/2010 22:50:52