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ATTORNEY CHARGED IN SCHEMES TO DEFRAUD THREE MASSACHUSETTS BANKS

 BOSTON, Nov. 16 ~PRNewswire~ -- A. John Pappalardo, United States Attorney for the District of Massachusetts, and Margaret R. Hinkle, Director of the New England Bank Fraud Task Force, announced today that attorney Dennis R. Lowe, age 46, formerly of Lexington, Massachusetts and now residing in Florida was charged in a three count information with bank fraud resulting from transactions with three separate Massachusetts banks.
 The first count charges Lowe and his co-conspirators, including a senior bank officer, with a conspiracy to defraud the now defunct First Service Bank for Savings ("First Service") of Leominster, Mass. of $773,500 in proceeds from the sale of 13 condominium units. The scheme to defraud involved two construction loans from First Service to Penacook Realty Trust to develop a condominium project in Concord, New Hampshire known as the Oak Bridge Condominiums. Lowe was a trustee of Penacook Realty Trust.
 The information alleges that in the summer of 1987 13 units in the Oak Bridge project were sold. Under the terms of the construction loan, Lowe was obligated to apply $773,500 of the proceeds from the sales to pay down the first construction loan at First Service. The 13 condominium units were part of the collateral securing the construction loan. Contrary to the loan agreement, Lowe used the majority of the sale proceeds to pay off loans at another bank.
 The information also alleges that Lowe and the senior bank officer at First Service devised a scheme to 1) create the false impression that First Service had received the $773,500 from the proceeds of the condominium sale; and, 2) to induce First Service to release the thirteen units from the mortgage securing the Oak Bridge project construction loan. The information further alleges that Lowe and others made it appear that First Service had been paid the condominium sale proceeds by diverting $773,500 from another construction loan with First
Service. As a result, First Service released the thirteen condominium units of collateral from the mortgage underlying the first construction loan, thereby placing the bank at risk for $773,500.
 In the second conspiracy count, the information alleges that Lowe and a co-conspirator bank officer arranged for a third party to receive a sham loan from Somerset Savings Bank of Somerville, Mass. The proceeds of the sham loan were used by Lowe.
 The third bank fraud count charges Lowe with defrauding Lexington Savings Bank of Lexington, Mass. of $175,000 through a "check kiting" scheme.
 If convicted, Lowe faces a maximum sentence of 15 years imprisonment and a fine of $750,000.
 The charges brought today 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 United States 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 are being prosecuted by trial attorneys Mark Adler and Pamela Merchant assigned to the New England Bank Fraud Task Force.
 -0- 11~16~92
 ~CONTACT: Press Officer, U.S. Attorney's Office, 617-223-9445~


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Publication:PR Newswire
Date:Nov 16, 1992
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