Thursday, April 26, 2012

Bay State Lender Accused Again Of Strong-Arming Borrowers In Effort To Wrestle Away Ownership Of Homes, Income Properties Used As Loan Collateral

In Worcester, Massachusetts, the Worcester Telegram & Gazette reports:

  • Trustees in U.S. Bankruptcy Court have filed an adversary proceeding on behalf of a local couple alleging that two area businessmen engaged in racketeering and conspiracy. Meantime, lawyers for the businessmen have denied the charges, calling them recycled.
  • Trustees representing the interests of creditors of the bankruptcy estate of husband and wife, Nicholas J. Fiorillo and Tracey L. Krowel, are suing David G. “Duddie” Massad and Marcello Mallegni. The case was filed Jan. 18; however, lawyers for the defendants this month filed a motion asking that the case be transferred to U.S. District Court. The trustees are Jonathan R. Goldsmith, a Springfield lawyer appointed in Mr. Fiorillo's bankruptcy, and Joseph H. Baldiga, a Westboro lawyer, appointed in Ms. Krowel's case.
  • Their adversary proceeding alleges extortion and loan-sharking, usurious interest rates, falsifying debt figures and bait-and-switch tactics to try to wrest income properties from the couple and their trusts and real estate company, and their personal residences.
  • Mr. Massad is chairman and majority stockholder in Commerce Bank and Trust Co. and Mr. Mallegni is manager and an owner of LBM Financial LLC in Marlboro. Also named as defendants in the suit are Commerce Bank and LBM which, along with Mr. Massad and Mr. Mallegni, are alleged to have committed breach of contract and breach of covenant of good faith and of fair dealing.


  • The trustees allege that the businessmen used threats of violence and loan sharking on loans at up to 75 percent interest in a scheme over the past 13 years to take over properties. The trustees are asking a jury to award $6 million.(1)

For more, see Charges against Massad, Mallegni similar to '07 ones (Bankruptcy trustees allege racketeering, conspiracy).

See also Bankruptcy Judge Hammers Mass. Money Lender Accused Of Predatory Practices In Piling Up Loan Charges, Wrestling Property Ownership Away From Borrowers for a July, 2009 story containing similar allegations against this outfit by other borrowers.

(1) Keep in mind that, in Massachusetts, it is evidently legal to rip off borrowers by charging usurious interest rates, provided that the lender notifies the state attorney general in writing ahead of time about it (see M.G.L. Chapter 271: Section 49(d). Criminal usury). It is interesting to note that the lender need not actually obtain approval from the state attorney general to make these loans (or any other government authority, for that matter); you merely have to let the AG's office know ahead of time, in writing, that you're going to engage in the ripoff.

Go here for an earlier-reported example of an LBM Financial letter, sent by Marcello Mallegni, informing the Massachusetts AG it will be charging usurious rates that, but for this notification, would otherwise be criminal pursuant to Chapter 271: Section 49(d), of the Massacusetts state statutes.

No comments: