The owner of one of New England’s leading real estate auction companies faces a federal charge for allegedly defrauding investors in a multi-million-dollar scheme.
Daniel J. Flynn III of Milton, 52, president of Quincy-based Daniel J. Flynn & Co., was arrested Thursday and had an initial appearance in U.S. District Court in Boston on a single count of wire fraud. The investigation is continuing, according to a court filing by Assistant U.S. Attorney Neil Gallagher Jr.
The charge relates to a real estate fund that Flynn formed in 2007, soliciting investments ranging from $10,000 to $500,000 to buy properties in Greater Boston.
“Flynn told investors that because of his involvement in the real estate/auction industry and his relationship with local area banks, he was able to learn about distressed or undervalued properties for what Flynn described as opportunistic investments,” an affidavit by FBI agent Kevin McCusker stated.
Flynn solicited loans from at least three groups of investors to acquire properties that he already owned, according to the affidavit. In some cases, Flynn allegedly told investors their loans would be secured by a mortgage on the property, but failed to record the mortgage and obtained loans from other investors for the same property. He also used the money to pay personal debts, the affidavit states, including upgrades to the basement of his Milton home, which has an assessed value of $1.8 million.
Flynn has been named as defendant in more than 20 civil actions in Suffolk, Norfolk and Barnstable counties in recent years related to his real estate investments. Flynn did not file responses to many of the lawsuits, and default judgments were entered against him in eight cases topping $6.1 million between March and August 2013.
“His strategy was to roll over and play dead,” said attorney Lawrence Mayo of Norwell, who represented a Watertown man who won a $250,000 judgment against Flynn. “I’ll be putting in a call to the U.S. attorney’s office to see if there’s any kind of an asset disgorgement process, which would hopefully compensate some of his victims.”
The affidavit refers to testimony of a former bookkeeper at Flynn’s auction company. The unnamed witness began working in a basement office at 161 Granite Ave. in Dorchester in late 2013. Flynn allegedly urged the bookkeeper to create a new company called Fenway Auction Group LLC which was run by Flynn and attempted to solicit loans from investors, although Flynn’s name was not associated with the company.
The bookkeeper eventually left the company but took the bank accounts with him, and was arrested after Flynn accused him of stealing $100,000, according to the court testimony. The bookkeeper pled guilty and agreed to return $25,000 to Flynn.
A message left at Flynn’s office in Quincy was not immediately returned. As of Monday morning, no defense attorney had filed a notice of appearance in the case.
