TWO CHARGED IN SCHEME TO DEFRAUD COMFED SAVINGS BANK AT CHANCERY COURT IN LYNN, MASS.
TWO CHARGED IN SCHEME TO DEFRAUD COMFED SAVINGS BANK AT CHANCERY COURT IN LYNN, MASS. BOSTON, Oct. 27 /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 Michael A. Costa, age 47, of Johnston, R.I., and Paul P. Sauvageau, age 50, of Salem, Mass., were charged in separate informations with bank fraud arising from loans made by the now defunct ComFed Savings Bank of Lowell, Mass. The informations charge that the two men 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 charges against Costa arise from a $130,000 loan he obtained from ComFed in July, 1988. The information charges that Costa engaged in a scheme to defraud ComFed by providing the bank with a purchase and sale agreement for the condominium unit which made it appear as if Costa would make a down payment of at least 25 percent, as the bank required for the loan. However, Costa concealed from the bank an agreement he had with the seller that the purchase price would be reduced and that no down payment would be made. According to the information, Costa also executed a second mortgage in favor of the seller which was concealed from ComFed as part of the scheme. Sauvageau is charged with engaging in a similar scheme to defraud ComFed when he purchased a Chancery Court condominium unit with a $153,750 loan he obtained from the bank in August 1988. The information alleges that although Sauvageau gave ComFed a purchase and sale agreement showing that he would make a 25 percent down payment, Sauvageau and the seller had agreed to a reduced purchase price, no down payment, and a hidden second mortgage. If convicted, Costa and Sauvageau each face a maximum sentence of five years' imprisonment and a fine of $250,000. 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 James P. Gillis, a trial attorney assigned to the New England Bank Fraud Task Force. -0- 10/27/92 /CONTACT: Press Officer, U.S. Attorney's Office, 617-223-9445/ CO: ST: Massachusetts IN: SU:
DD -- NE020 -- 5453 10/27/92 13:19 EST
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|Date:||Oct 27, 1992|
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