FOR IMMEDIATE RELEASE CIV MONDAY, DECEMBER 15, 1997 (202) 616-2765 TDD (202) 514-1888
BOSTON LAW FIRM TO PAY CIVIL PENALTY TO SETTLE ALLEGATIONS IT SUBMITTED FALSE LOAN DOCUMENTS TO BANK
WASHINGTON, D.C. -- A Boston, Massachusetts, law firm, Davis, Malm & D'Agostine, P.C., will pay the federal government a civil penalty of $80,000 to settle allegations it failed to tell The Lawrence Savings Bank of Lawrence, Massachusetts, that the value of a property was overstated in obtaining a federally-insured loan for the property through the bank, the Department of Justice announced today.
The United States alleged that Davis, Malm & D'Agostine allegedly knew but failed to alert the bank that the participants in a loan to finance the purchase of a moving and storage company in Fitchburg, Massachusetts, had significantly inflated the purchase price by using a straw buyer, said Frank Hunger, Assistant Attorney General in charge of the Civil Division.
The firm acted as Lawrence Savings' closing attorneys on the 1987 loan insured by the Federal Deposit Insurance Corporation (FDIC).
The Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), (12 U.S.C. § 1833a) provides for both civil and criminal penalties against persons defrauding banks insured by the FDIC. Section 951 of FIRREA allows the Attorney General to bring a civil penalty action against those who participate in fraud on federally-insured banks.
The Civil Division and the New England Bank Fraud Task Force investigated the case. The Civil Division negotiated the settlement with Davis, Malm & D'Agostine.