Two bank employees, a mortgage broker, the broker’s assistant and a Worcester man have been indicted for allegedly creating false or misleading bank documents, according to Attorney General Martha Coakley.
The false documents were then used to obtain fraudulent mortgage loans in a scam dating to at least 2007.
Attorney General Martha Coakley announced the indictments Friday afternoon in Boston.
The case involves between 40 and 60 properties, mostly in Worcester County, and millions of dollars to date, Coakley said. The investigation began in July 2007 following a tip Coakley’s office received from the Division of Banks about a Cambridge Savings Bank employee.
The president of Direct Finance, the only brokerage involved, is Alain Valles, who is also president of statewide broker trade group the Massachusetts Mortgage Association. Representatives for Valles said the company is cooperating and stressed that Direct Finance has not been charged with any wrongdoing.
Erik Tancun, 29, of Marshfield; Steven Stapleton, 36, of Waltham; Kenneth Garabedian, 51, of Worcester; Martha Sass, 46, of Marshfield; and Thomas Itemere, 28, of Worcester have been charged in a scheme through which borrowers fraudulently obtained mortgage loans after so-called “verification of deposit” forms indicated they had more money in their accounts than they actually had.
Verification of deposit forms are used by lenders to verify account information before issuing a mortgage loan.
“The verification of deposit piece is somewhat the lynchpin [that allows] a lender to say, ‘This is someone we can give a loan to,'” Coakley said.
Tancun and Sass are former employees of Direct Finance in Hanover.
Garabedian allegedly coordinated loans brokered through Direct Finance and arranged for false verification of deposit statements to be produced by the bank employees on behalf of borrowers, who got the loans from Bank of America and other lenders.
Garabedian then reportedly collected a portion of the broker’s fee for the loans and distributed a portion to the bank employee involved.
Stapleton worked for Citizens Bank and Cambridge Savings Bank, and Itemere worked for a Bank of America branch in Worcester.
The lenders are not, at this point, alleged to be involved in the scheme, Coakley said. All institutions involved have cooperated fully, she added.
The five defendants are collectively charged with a total of 106 counts of making or publishing false or exaggerated statements, misconduct of a bank employee, aiding and abetting the misconduct of a bank employee, commercial bribery and conspiracy. All the charges are felonies, and can carry sentences of up to 10 years in prison.
