Real Estate Development Firm CFO Involved in Fraud Scheme is Sentenced

Nora R. Dannehy, United States Attorney for the District of Connecticut, announced that PAUL MAYOTTE, 69, of Brookfield, was sentenced today by Senior United States District Judge Alfred V. Covello in Hartford to four years of probation, the first six months of which MAYOTTE must serve in home confinement with electronic monitoring, for conspiring with real estate developer Richard Girouard to defraud an investor out of money. Judge Covello also ordered MAYOTTE to pay a fine in the amount of $15,000. On December 7, 2009, MAYOTTE pleaded guilty to one count of conspiracy to commit wire fraud.

According to court documents and statements made in court, MAYOTTE was the CFO of Girouard Associates, Inc. and RRG Investments, LLC, both of which are owned by Connecticut real estate developer Richard Girouard. 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.

MAYOTTE has 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 and Girouard kept the money to which the victim investor was entitled.

MAYOTTE has admitted that he profited $103,000 from the scheme.

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 was investigated by the Federal Bureau of Investigation. The case is being prosecuted by Assistant United States Attorneys Eric J. Glover and David Novick.