Massachusetts man pleads guilty to $4.3m mortgage fraud scheme

The scheme involved at least two dozen fraudulent loan transactions

Massachusetts man pleads guilty to $4.3m mortgage fraud scheme

A Massachusetts man has admitted to his role in decade-long mortgage fraud conspiracy that resulted in $4.3 million in losses to lenders over at least two dozen loan transactions.

Joseph Bates III pleaded guilty before US Senior District Court Judge Douglas Woodlock to one count of conspiracy, three counts of wire fraud affecting a financial institution, and two counts of bank fraud.

Bates was alleged to have defrauded 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 primarily in Salem. Bates and his co-conspirators ran the scheme from 2006 through 2015.

The co-conspirators usually bought multi-family buildings with two-to-four units and then converted into condominiums. They then recruited other borrowers to purchase the individual condominium units and financing the purchases through fraudulent mortgage loans.

In many instances, the borrowers defaulted on their payments because they did not have the financial ability to repay the loans, resulting in foreclosures.

Bates faces a maximum sentence 30 years in prison, five years of supervised release, and a fine of $1 million for each of the charges of bank fraud and wire fraud affecting a financial institution. He faces up to five years in prison, three years of supervised release, and a fine of $250,000, or twice the gross gain or loss, whichever is greater, for the charge of conspiracy.

A sentencing date has not yet been scheduled.

George Kritopoulos, an alleged co-conspirator, was indicted on related charges in September. David Plunkett, another alleged participant, was charged by information.