BOSTON — A former Boston real estate developer from Mansfield is now serving an 11-year prison sentence for orchestrating what federal prosecutors say was one of the largest residential mortgage scams perpetrated in state history.
Michael David Scott, 51, of 40 Old Stable Drive, in Mansfield, was also ordered to pay almost $11.4 million in restitution and forfeit $7.4 million. He will also be on probation for five years after his release from prison, according to the U.S. Attorney’s office.
The sentence was handed down Thursday in federal court in Boston by U.S. District Court Judge Richard G. Stearns.
In June, Scott pleaded guilty to 32 counts of wire fraud, 14 counts of bank fraud, and 22 counts of money laundering.
Scott built a real estate empire based on fraud from 2006 to 2008 by buying up buildings in Roxbury and Dorchester, breaking them up into condominiums and selling them off through a mortgage fraud scam, according to court documents.
Scott and two associates pitched the condos to “straw buyers” as “too-good-to-be-true investment” opportunities. They promised buyers they would not have to make down payments, pay closing costs or be responsible for mortgage payments, but still would share in profits when the units were resold, according to court documents.
In order to obtain mortgage loans in the names of the “straw buyers,” Scott submitted mortgage loan applications that falsely represented key information, such as the buyers’ income, personal assets, down payment, and intention to reside in the condominiums.
The mortgage lenders, nine national mortgage companies and one local bank, were led to believe that the straw buyers had made substantial down payments and paid substantial sums at closings.
Scott’s co-conspirators, Jerold Fowler, 31, and Thursa Raetz, 40, both of Norfolk, Va., pleaded guilty to two counts of wire fraud in June. They are are scheduled to be sentenced next week.