Sunday, May 16, 2010

Massachusetts AG Obtains Indictment Of Attorney Accused Of Using Forged Mortgage Assignments In Attempt To Hijack Payoff Proceeds In R/E Closings

From the Office of the Massachusetts Attorney General:

  • A Marblehead attorney has been indicted by a statewide Grand Jury for allegedly attempting to retrieve over $1.3 million dollars in mortgage funds in connection with a sophisticated mortgage fraud scheme. Leon Gelfgatt, age 49, allegedly used false documents to create the appearance that mortgages on several Massachusetts properties which were scheduled for impending sale had been transferred to a fake company created by Gelfgatt. Gelfgatt allegedly did this in order to obtain the payoff funds sent by real estate closing attorneys when the properties were sold.(1)

For the Massachusetts AG press release, see Marblehead Attorney Indicted in Connection with Orchestrating Multi-Million Dollar Forged Mortgage Assignment Scheme.

(1) According to authorities, between August and November of 2009, Gelfgatt allegedly identified and targeted fourteen high-end properties which were scheduled for an imminent sale. Gelfgatt then recorded seventeen forged mortgage assignments at the Registries of Deeds in Suffolk, Norfolk, and Middlesex Counties. These false mortgage assignments appeared to transfer the mortgage from the correct mortgage company to either Baylor Holdings, Ltd., or Puren Ventures, Inc., which were inactive corporations being offered for sale on the Internet. Gelfgatt created an elaborate system of email addresses, phone numbers, and electronic fax numbers to give the impression that these were functioning and legitimate businesses.

Gelfgatt then waited for attorneys responsible for clearing the title to the properties to reach out to these sham companies to request a “payoff statement”. A payoff statement is a document used by mortgage companies to state the precise amount necessary to pay a mortgage in full. Authorities allege that on two occasions Gelfgatt, in the guise of Baylor Holdings, Ltd., allegedly provided these closing attorneys with false payoff statements. The payoff statements instructed the closing attorneys to overnight the funds required to pay off the mortgages to an office address in Boston. Gelfgatt was arrested after he attempted to retrieve these payoff funds.

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