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A certified public accountant from Lynn, the third defendant in a decade-long mortgage fraud scheme, was sentenced yesterday in Boston federal court.
David Plunkett, 57, was sentenced to time served – about one day in prison – and three years of supervised release for creating fraudulent tax returns and submitting fraudulent letters to lenders as part of the scheme, according to a statement from the U.S. attorney’s office. Plunkett was also ordered to pay $147,500 in restitution to victims and $64,284 in restitution to the Internal Revenue Service.
Plunkett, who was charged in September 2018 along with co-defendants Joseph Bates III and George Kritopoulos, pleaded guilty in February 2019 to one count of bank fraud and one count of aiding in the submission of false tax returns.
According to the U.S. attorney’s statement, Kritopoulos, Bates and Plunkett engaged in a scheme between 2006 and 2015 to defraud banks and other financial institutions by causing false information to be submitted to those institutions on behalf of borrowers primarily located in Salem.
The properties involved in the scheme were usually multi-family buildings with two to four units that had been converted into condominiums. Kritopoulos recruited borrowers to purchase the individual condominium units and finance them by mortgage loans obtained by fraud, according to the statement.
Kritopoulos and Bates together created and provided false documents to lenders to obtain financing for the purchases, according to the statement. The false information submitted to lenders included employment, income and assets, and intent to occupy the property.
Plunkett, who had been recruited by Kritopoulos, assisted the scheme by preparing tax returns for some of the borrowers that contained false and inflated income, the statement said. Some of those tax returns were submitted to lenders in support of the fraudulent loan applications.
Plunkett also signed letters falsely representing that his CPA firm had prepared corporate tax returns for one of the shell entities that the documents falsely said employed the borrowers. These returns had not been prepared or filed, the statement said.
Because the borrowers did not have the financial ability to repay the loans, they defaulted on their loan payments in all but two instances among 21 properties, the statement said, resulting in foreclosures and losses to the lenders.
Kritopoulos was sentenced in October 2022 to four years in prison and two years of supervised release after being convicted by a federal jury. Bates was sentenced last month to 18 months in prison and three years of supervised release.
