Home New Haven Press Releases 2009 CFO of Real Estate Development Firm Admits Role in Fraud Scheme

CFO of Real Estate Development Firm Admits Role in Fraud Scheme

U.S. Attorney’s Office December 07, 2009
  • District of Connecticut (203) 821-3700

Nora R. Dannehy, United States Attorney for the District of Connecticut, announced that PAUL MAYOTTE, 69, of Brookfield, the CFO of Girouard Associates, Inc. and RRG Investments, LLC, both of which are owned by Connecticut real estate developer Richard Girouard, pleaded guilty today before Senior United States District Judge Alfred V. Covello in Hartford to one count of an indictment charging MAYOTTE with conspiring with Girouard to commit wire fraud related to a scheme to defraud an investor out of money.

According to court documents and statements made in court, in November 2002, RRG Investments purchased Fleet Bank’s share of an entity known as “LINC Receivables.” LINC Receivables was the owner of certain leases and installment sales contracts that produced a stream of revenue. That same month, MAYOTTE, on behalf of RRG Investments, negotiated an agreement on lending terms with the victim investor. Under a subsequent written agreement, the investor agreed to loan RRG Investments $2.5 million in return for a 32 percent share of the net cash flows received pursuant to the purchase of LINC Receivables after RRG Investments and the investor had recouped their initial investment of $4.15 million and $2.5 million, respectively.

In October 2005, MAYOTTE informed the victim investor that RRG Investments would be withholding all further distributions to the investor due to legal and tax issues that had arisen concerning LINC Receivables. MAYOTTE told the investor that he would keep him advised and let him know as soon as the issues were resolved.

In pleading guilty, MAYOTTE admitted that he and Richard Girouard agreed to conceal from the investor the fact that the legal and tax issues cited as cause for temporarily withholding distributions did not result in the need to withhold distributions indefinitely, and that he and Girouard agreed not to resume making payments to the investor as they knew they were required to do. Instead, MAYOTTE admitted that he and Girouard kept the money to which the victim investor was entitled.

Judge Covello has scheduled sentencing for February 25, 2009, at which time MAYOTTE faces a maximum term of imprisonment of five years. MAYOTTE also must make full restitution to the victim.

On November 24, 2009, Girouard pleaded guilty to one count of conspiracy to commit financial institution bribery stemming from his involvement in LINC Receivables transactions. Girouard has agreed separately to make restitution of more than $427,000 to the victim investor arising out of the same allegations to which MAYOTTE pleaded guilty today. He awaits sentencing.

This matter has been investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorneys Eric J. Glover and David Novick.