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IN RE: E. FREDERICK ARMSTRONG

NO. BD-98-004

SUMMARY

 

Between March and July 1997, the respondent conspired with Todd Schaeffer, the principal of Crown Group Trust, to defraud mortgage companies of funds by misrepresenting the purchase price of properties financed by the lenders. The scheme involved the purchase of three- and four-family houses in Brockton, Boston, and Springfield for fair market value and then purporting to sell those properties for grossly inflated sums to Robert and Tessie Carll, or to a straw for the Carlls. The mortgage companies would receive inflated appraisals and false mortgage loan applications to justify the amount of the loan. In addition, the buyers would falsely represent that they were paying 20% as a down payment on the properties.

The respondent served as closing attorney on the loans. In that capacity, he prepared settlement statements which falsely represented that the buyers had paid earnest money of 20% of the purchase price. The respondent also concealed from the mortgage companies the existence of the two separate transactions or "land flips." The respondent and Schaeffer split the excess mortgage proceeds between them, with 25% of the excess going to the respondent.

In about July 1997, a grand jury began investigating the property transactions, and the Carlls were subpoenaed to testify. The Carlls contacted the respondent and Schaeffer concerning the grand jury investigation. Unbeknownst to the respondent and Schaeffer, the Carlls also contacted the District Attorney and agreed to cooperate in the investigation.

The respondent met with the Carlls twice before their grand jury appearance. He advised them to testify that they had, in fact, paid twenty percent down in cash from their savings, and he had Mr. Carll sign receipts purporting to show that the respondent had received the cash down payments. The cash down payments purportedly received amounted to $600,000. The respondent also advised the Carlls that it was not necessary for them to obtain separate counsel to represent them before the grand jury.

On June 5, 1998, the respondent was convicted in the Plymouth Superior Court of five counts of conspiracy to commit larceny over $250, two counts of intimidation of a witness, and two counts of attempting to procure another to commit perjury. The respondent was sentenced to 2½ years of imprisonment, followed by probation for four years, and fined.

On January 25, 1999, the respondent filed an affidavit of resignation pursuant to S. J. C. Rule 4:01, § 15, which acknowledged his convictions and his violation of Canon One, DR 1-102(A)(4)-(6); Canon Five, DR 5-101; and Canon Seven, DR 7-102(A)(1)-(3). Bar Counsel recommended that the affidavit of resignation be accepted and that an order of disbarment enter retroactive to the effective date of the respondent’s temporary suspension.

On February 8, 1999, the Board of Bar Overseers voted unanimously to recommend to the Court that the affidavit of resignation be accepted and that an order of disbarment enter effective on the date of the temporary suspension. On March 25, 1999, the Supreme Judicial Court for Suffolk County (Fried, J.) entered an order disbarring the respondent effective February 10, 1998, the date of the respondent’s temporary suspension.

 



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