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Press Release

Court Of Appeals Affirms Conviction And Sentence In Mortgage Rescue Scheme

For Immediate Release
U.S. Attorney's Office, District of New Hampshire

          CONCORD, New Hampshire - United States Attorney Emily Gray Rice announced that the United States Court of Appeals for the First Circuit in Boston, Massachusetts affirmed Michael Prieto's New Hampshire conviction and 72 month sentence for committing mail fraud by organizing and managing a fraudulent mortgage rescue scheme.  Prieto's crime grew out of the mortgage crisis in the mid and late 2000s and involved defrauding distressed homeowners out of their properties and then obtaining money by lying on subsequent mortgage applications to strip equity from these properties.

          On appeal, the First Circuit rejected Prieto's argument that the government improperly charged him with a single, overarching fraud count.  The Court concluded that the government's single charge against Prieto was appropriate because the charge reflected the "multi-faceted [and] complex scheme" that Prieto devised.  The Court also denied Prieto's claim that the government had not presented sufficient evidence of Prieto's intent to commit fraud.   In this regard, the Court concluded that "there was ample support to find that Prieto was both the conductor and a musician in an orchestrated fraud that worked for a while only because it was fraud."  Finally, the Court determined that there was sufficient evidence that the lies Prieto placed in mortgage applications were important to the bank's decision to issue loans.  As the Court noted, lies about a mortgage applicant's stated income and the planned use for the property (i.e., primary residence vs. investment property) are important pieces of information to a bank because they have a natural tendency to influence a bank's loan decision.  

          United States Attorney Rice remarked:  "This was an important victory for the government. Individuals engaged in fraudulent mortgage rescue schemes took advantage of honest homeowners at their most vulnerable time.  People like the defendant, who seek to leverage people's economic distress into personal gain, must be held accountable.   Prieto's long sentence, which was affirmed by the Court of Appeals, will hopefully send a strong deterrent message that this kind of conduct will not be tolerated."

          Prieto's appeal was defended by Assistant United States Attorney Seth R. Aframe.  The underlying investigation was conducted by the Federal Bureau of Investigation and the Postal Inspection Service.  The case was prosecuted in the trial court by AUSA Michael Gunnison and AUSA Mark Zuckerman.

Updated January 25, 2016

Topic
Mortgage Fraud