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DEVELOPER PLEADS GUILTY TO DEFRAUDING DIME SAVINGS BANK

 DEVELOPER PLEADS GUILTY TO DEFRAUDING DIME SAVINGS BANK
 BOSTON, Nov. 10 /PRNewswire/ -- United States Attorney A. John Pappalardo announced that a Lexington developer has pleaded guilty to conspiracy, bank fraud, and false statements in connection with condominium mortgage loans obtained from The Dime Savings Bank of New York and its Massachusetts subsidiary, Dime Real Estate Services of Massachusetts.
 United States Attorney A. John Pappalardo announced that David E. Burns, 34, of Lexington, Mass., pleaded guilty today to all counts of a 21-count Information charging him with conspiracy, ten counts of bank fraud and ten counts of making false statements to a federally insured bank. At the change of plea hearing, a federal prosecutor told United States District plea hearing, a federal prosecutor told United States District Judge Rya W. Zobel, who accepted BURNS' plea, that BURNS had conspired with others to defraud Dime in connection with mortgage loans which condominium buyers obtained from Dime in order to purchase units at a development which BURNS owned located at 16-30 Juniper Road, North Attleboro, known as "Hawthorne Village." Had the case gone to trial, a federal prosecutor told Judge Zobel, the government would have shown that BURNS participated in some fifty loans from Dime in which BURNS and the borrowers falsely stated that the purchasers had made large cash down payments on the units, when they had not, and that there was no secondary or subordinate financing on the units, when BURNS had given 10 percent second mortgage on the units.
 At sentencing, BURNS faces up to 5 years imprisonment and a $250,000 fine on the conspiracy count, 5 years imprisonment and a $250,000 fine on each of the ten bank fraud counts and 2 years imprisonment and a $250,000 fine on each of the ten false statements counts.
 In related cases, four defendants were indicated by a federal grand jury and two additional defendants were charged by information on Sept. 30, 1992, in connection with the Hawthorne Village project. In the Indictment, Arthur Eric Peach, of South Easton, a former loan representative with Dime; Charles McCormick, of Canton, a real estate investor; Alan H. Segal, of Newton, a Massachusetts attorney with law offices at One Rockdale Street, Braintree; and Robert G. Klein, of Newton, a Massachusetts attorney and member of the firm of Kline, Gordon & Ginn, formerly known as Klein & Gordon, 40 Broad Street, Boston, were charged with defrauding Dime in connection with the Hawthorne Village project. Peach, Segal and Klein were indicted on one count of conspiracy, fifty counts of bank fraud and fifty counts of false statements to a federally insured bank. McCormick was indicted on one count of conspiracy, twenty-nine counts of false statements to a federally insured bank. According to the indictment, the defendants defrauded Dime by deceiving the bank into believing that buyers of condominium units at the project had made large down payments on the units, when in truth they had made no down payments. The indictment also charges that the defendants concealed from Dime the fact that the buyers had received 10 percent second mortgages from BURNS as part of their purchase deal.
 Thomas Behenna, a Massachusetts attorney, pleaded guilty on Oct. 29, 1992 to three counts of making false statements to a federally insured bank in connection with Hawthorne Village and another condominium project.
 Sandra Epstein, a Massachusetts attorney and a former employee of the firm Klein & Gordon, which represented David E. Burns in connection with the Hawthorne Village project, was also charged by an information with three counts of making false statements to a federally insured bank.
 The cases were investigated by Special Agents of the Federal Bureau of Investigation and are being prosecuted by Assistant United States Attorney Carolyn Stafford Stein of Pappalardo's Economic Crimes Unit.
 United States Attorney Pappalardo stated that the investigation on fraud on the shareholders of Dime is continuing.
 -0- 11/10/92
 /CONTACT: United States Attorney District of Massachusetts, 617-223-4025/ CO: United States Attorney District of Massachusetts ST: Massachusetts IN: SU:


LD-KW -- NY120 -- 9534 11/10/92 19:01 EST
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Date:Nov 10, 1992
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