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TWO PLEAD GUILTY TO SCHEME TO DEFRAUD COMFED SAVINGS BANK AT CHANCERY COURT IN LYNN

 TWO PLEAD GUILTY TO SCHEME TO DEFRAUD COMFED
 SAVINGS BANK AT CHANCERY COURT IN LYNN
 BOSTON, Oct. 30 /PRNewswire/ -- A. John Pappalardo, U.S. Attorney for the District of Massachusetts, and Margaret R. Hinkle, director of the New England Bank Fraud Task Force, announced today that Michael A. Costa, 47, of Johnston, R.I., and Paul P. Sauvageau, 50, of Salem, Mass., pleaded guilty to separate informations charging them with bank fraud arising from loans made by the now defunct ComFed Savings Bank of Lowell, Mass. At the plea hearing before U.S. District Judge Edward F. Harrington, a federal prosecutor stated that Costa and Sauvageau engaged in separate schemes employing hidden second mortgages and inflated purchase prices to buy units in a condominium project in Lynn, Mass., known as Chancery Court. ComFed Savings Bank, once one of the largest residential mortgage lenders in Massachusetts, failed in December 1990.
 The prosecutor stated at the hearing that Costa and Sauvageau are cooperating in the continuing investigation of loans made by ComFed and other lenders at Chancery Court.
 Judge Harrington scheduled sentencing in the two cases for Dec. 28. Costa and Sauvageau each face a maximum sentence of five years' imprisonment and a fine of $250,000. The charges against Costa and Sauvageau are part of a continuing investigation being conducted by the New England Bank Fraud Task Force. The Task Force was established in 1991 as part of the Justice Department's ongoing campaign to combat fraud against federally insured financial institutions. Members of the Task Force include the U.S. Attorneys' offices for each of the six New England states; the Fraud Section of the Department's Criminal Division; the Civil and Tax Divisions; the Federal Bureau of Investigation, the Internal Revenue Service, and the Secret Service.
 These cases were investigated by special agents of the Federal Bureau of Investigation and prosecuted by James P. Gillis, a trial attorney assigned to the New England Bank Fraud Task Force. The investigation into bank fraud involving loans at Chancery Court is continuing.
 -0- 10/30/92
 /CONTACT: Press Officer, U.S. Attorney's Office, 617-223-9445/ CO: ST: Massachusetts IN: SU:


CN -- NE016 -- 7376 10/30/92 18:12 EST
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Publication:PR Newswire
Date:Oct 30, 1992
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