Luxury home builder faces 35 years in prison for mortgage fraud, tax evasion

Contractor admits to dodging IRS and falsifying mortgage documents

Luxury home builder faces 35 years in prison for mortgage fraud, tax evasion

A Massachusetts luxury home builder has pleaded guilty to charges of tax evasion and mortgage fraud.

Kent Pecoy, who owned and operated Kent Pecoy & Sons, Construction Inc., a West Springfield-based company specializing in commercial and luxury home construction, admitted to defrauding the United States and falsifying documents to secure a mortgage for a client.

According to court documents and statements made during the hearing, Pecoy engaged in a scheme from 2009 through 2016 to hide income from the Internal Revenue Service (IRS). He received a total of $1.11 million in cash payments from Kevin Kennedy, a client who was recently sentenced to prison for tax-related offenses. These payments were for the construction of custom homes in East Longmeadow and on Cape Cod.

Pecoy did not deposit the majority of these cash payments into his business’s bank accounts. Instead, he used the cash to pay vendors and subcontractors directly. For instance, Pecoy admitted to paying approximately $135,700 in cash to subcontractors for work on the Cape Cod property. To cover up these transactions, Pecoy kept separate ledgers, fabricated contracts, and made false entries in his company’s accounting system.

To further evade detection, Pecoy structured his cash deposits in amounts under $10,000 to avoid mandatory currency transaction reports.

The fraudulent activities extended to mortgage applications as well. In January 2010, Pecoy and Kennedy created two versions of a contract for the East Longmeadow home. One contract reflected the true purchase price, the amount Kennedy had paid in cash as a down payment, while the other showed a price of $160,000 lower. This deflated contract was used to deceive the bank into approving a mortgage based on the lower price.

These actions resulted in a tax loss of over $250,000 to the IRS.

Pecoy also obstructed justice during the IRS investigation. Despite receiving a grand jury subpoena, Pecoy failed to provide numerous relevant documents. IRS agents later discovered these documents during a search of his business.

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Pecoy’s sentencing is scheduled for August 20. He faces a maximum sentence of five years in prison for the conspiracy charge and up to 30 years for making a false statement to a bank. Additional penalties include supervised release, restitution, and financial fines.

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