Worcester Man Sentenced to Serve Time in Jail for Role in Mortgage Fraud Scheme
Kenneth Garabedian, age 55, of Worcester, pled guilty today in Middlesex Superior Court to charges of Making or Publishing False or Exaggerated Statements (10 counts), Aiding & Abetting the Misconduct of a Bank Employee (2 counts), Commercial Bribery, and Conspiracy (2 counts). After the plea was entered, Judge Jane Haggerty sentenced Garabedian to two and a half years in the House of Correction, with one year to serve and the balance suspended for a probationary period of three years. Garabedian must also pay a fine in the amount of four thousand dollars.
"The individuals who orchestrated this scheme used their positions in the banking industry and knowledge of the system to take advantage of a vulnerable housing market for their own personal gain, all the while inflicting serious damage to the local community," AG Coakley said.
Garabedian's guilty plea and sentence resolve the AG's investigation into a mortgage fraud ring based in Worcester County and organized by Allen Seymour. The other defendants who have pled guilty include:
- Allen Seymour, age 42, of Oxford, who pled guilty on November 15, 2010 to charges of Forgery (4 counts), Uttering (8 counts), Inducing a Lender to Part with Property (12 counts) and Larceny by False Pretenses and was sentenced to serve two years to two and a half years in State Prison, followed by five years of probation. Seymour's State prison sentence will begin after the completion of an unrelated federal prison sentence. Seymour was also ordered to pay restitution in the amount of $750,000 to the victims of the scheme. While on probation, Seymour is prohibited from working in the real estate industry.
- Former Attorney Raymond A. Desautels III, age 43, of Oxford, who pled guilty on October 29, 2009 to five counts of Inducing a Lender to Part with Property and was sentenced to serve two years in State Prison.
- Erik Tancun, age 31, of Marshfield, formerly a mortgage broker with Direct Finance, pled guilty on September 14, 2010, to charges of Making or Publishing False or Exaggerated Statements (37 counts), Aiding & Abetting the Misconduct of a Bank Employee (2 counts), Conspiracy (2 counts) and Commercial Bribery. Tancun was sentenced to serve two to two and a half years in State Prison.
The Attorney General's Office commenced an after the office received information from the Commonwealth's Division of Banks regarding the production of false bank documents by a bank employee at a local bank. During the course of the investigation, authorities discovered that Ken Garabedian coordinated the production of some of the false bank documents, and paid one of the bank employees for completing the false bank documents.
Authorities determined that these false documents were used to bolster the loan applications of "straw buyers" in a widespread foreclosure rescue scheme based in Worcester County and operated by Allen Seymour.
Middlesex and Worcester Grand Juries returned indictments against five defendants, including Ken Garabedian, on June 26, 2008. A subsequent Worcester County Grand Jury returned indictments against Allen Seymour and three other defendants on September 25, 2009. All nine defendants have now pled guilty for their roles in the mortgage fraud scheme.
The case was prosecuted by Assistant Attorney General James O'Brien, Chief of Attorney General Martha Coakley's Public Integrity Division, and Assistant Attorney General Andrew Doherty, of AG Coakley's Fraud and Financial Crimes Division. Former financial Investigator James McFadden and Massachusetts State Troopers assigned to the Attorney General's Office conducted the investigation.