Angered by the release of a felonious mortgage broker to house arrest, a Plymouth County prosecutor is appealing the ruling by Superior Court Justice Isaac Borenstein, noting that it will allow the mastermind of a $2 million land- flip scam to serve just five months of a two-year jail sentence.
We obviously do not agree with [Borenstein’s] decision, and I am going to be discussing the possibility of asking the appeals court to [reverse] the decision, Plymouth County First Assistant District Attorney Joseph P. Gaughan told Banker & Tradesman. Gaughan called Borenstein’s action very disturbing.
Through a spokesman, Borenstein declined comment on the matter last week, citing the ongoing status of the case.
The imbroglio revolves a-
round broker Todd L. Schaeffer, who admitted in Suffolk Superior Court last August that he and a closing attorney had conspired to defraud at least three mortgage companies out of an estimated $2 million in loans. Under the ruse, Schaeffer told three investors that they could acquire residential buildings in Plymouth and Suffolk counties with no down payment. He then allegedly employed two appraisers to overvalue the properties, duping the investors and the mortgage companies into believing they were worth a higher amount when Schaeffer was secretly buying them on behalf of the investors at the real market price. He and his cohorts split the difference, Schaeffer acknowledged, reaping an estimated $400,000.
Prosecutors maintain that Schaeffer personally pocketed 75 percent of the proceeds, funds that have not been recovered. At that rate, Schaeffer would have earned just over $1,760 for each day served in jail for his scheme. Meanwhile, a company that Schaeffer has previously admitted he is the manager of, and of which Schaeffer’s father is listed as president and treasurer, has continued to buy and sell numerous properties in Central and Western Massachusetts during the past two years. According to a search of Worcester and Hampden county records by B&T, those deals have provided Renewed Properties LP a profit of $858,000 in that time frame.
‘A Nightmare’
Despite that, Schaeffer’s attorney, Thomas R. Shane of Newton, claimed last week that his client is destitute, maintaining that the felon’s wife, Holli Siegel, has been forced to turn to the community for assistance while Schaeffer was incarcerated first at the Suffolk County House of Corrections, and in subsequent stints at the Essex County and Worcester County houses of correction.
I don’t know who’s making any phenomenal money, Shane said last week when told of Renewed deals. Shane, a Newton lawyer who is listed as registered agent of Renewed Properties, also said he is unfamiliar with the ongoing activity of the company.
I don’t have a clue, Shane said of the firm. In any event, the sales have continued, with Renewed having bought and sold 18 separate properties since February 1998. Most recently, Renewed traded 202 Tyler St. and 283-285 Allen St., both in Springfield, for $50,000 and $75,000, respectively. Renewed had purchased 202 Tyler St. in October for $27,000, while 283-285 Allen St. was purchased in August for $28,000. The 18 properties were acquired for an aggregate $617,400, and sold for a total of $1.48 million.
According to the Massachusetts Secretary of State’s Office, Renewed Properties has an address on Colborne Road in Brighton, where Schaeffer and Siegel resided prior to moving last year to Worcester. Renewed’s president, Morris Schaeffer, has an address of Morrisville, Pa., although no phone number is listed in his name.
Besides downplaying the Renewed connection, Shane also disputed the notion that Schaeffer profited from the land flips, and also maintained that there were no real victims in the case. The investors, James Willis and Robert and Jesse Carll, were unavailable for comment, but Willis said in an interview last year that both his and the credit of his two friends have been destroyed by the land flip scam. In addition, several of the properties were thrown into disrepair and legal limbo once the scam was uncovered.
Shane would not discuss Borenstein’s decision, except to say that, we think justice was served. Schaeffer did not respond to a request for an interview through Shane, but did insist at a recent hearing before Borenstein that his experience in jail had been worse than a nightmare, one in which he was subjected to humiliation and degradation every day.
In requesting that his sentence be reduced, Schaeffer cited everything from his wife’s pending pregnancy to self-proclaimed remorse gained through prison counseling. While admitting his role in the crime, Schaeffer also blamed the investors, claiming it was their responsibility to inspect the properties. Other factors in the misdeeds, he said, included the death of his mother in 1997 and his supposed lack of experience in real estate.
There was never any inkling that anybody would lose a penny, Schaeffer insisted to Borenstein.
Due to the pending appeal, Gaughan declined comment on specifics of the Schaeffer case, but in his arguments to Borenstein at the hearing, Gaughan lambasted Schaeffer for his efforts to escape the two-year sentence, especially given that the penalty was seen as a minimal term agreed to as part of a plea agreement. The Plymouth County D.A.’s office, while subsequently determining that Schaeffer would be less than useless as a witness against the appraisers in their upcoming trial, stuck to its end, Gaughan said, and Schaeffer should be required to do the same.
Gaughan also noted that Schaeffer would receive far less jail time than the closing attorney, E. Frederick Armstrong of Marblehead, who spent 15 months in prison despite playing a lesser role in the scam.
He had a family, too, Gaughan said, adding that his office believes Schaeffer was clearly the mastermind in this whole [fraud]. In addition, Gaughan said Schaeffer has absolutely no remorse for what he did.
I have found the man to be arrogant. I have found him to be putting a spin on every aspect of the case, Gaughan said.
The appeal will call into question whether Borenstein had the authority to reduce Schaeffer’s sentence in light of the previous plea agreement. In the meantime, Schaeffer is on house arrest at his residence in Worcester, required to wear an alarmed bracelet for the duration of his sentence.
