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United States Attorney's Office District of Connecticut
Press Release

March 1, 2011


David B. Fein, United States Attorney for the District of Connecticut, announced that RICHARD NOVAK, 47, of Middletown, pleaded guilty today before Chief United States District Judge Alvin W. Thompson in Hartford to one count of making a false statement on a federal mortgage loan document.

This matter stems from an investigation into an extensive mortgage fraud scheme headed by Syed Babar and others during which participants obtained residential real estate loans, including loans insured by the Federal Housing Administration, through the use of sham sales contracts, false loan applications and fraudulent property appraisals.

According to court documents and statements made in court, NOVAK acted as the attorney representing the seller of a residence located at 97 Bradford Avenue in East Haven.  NOVAK also had power of attorney for the seller and had previously lived at the residence.   In connection with the closing for the property, which occurred on approximately June 4, 2008, NOVAK knowingly signed a HUD-1 Settlement Statement that contained several false statements, including an overstatement of the amount required to pay off a second lien on the property, a representation that the buyer had paid a $22,000 deposit when no deposit was ever paid, a representation that $48,345.62 was owed to “Sheda Telle Construction” for an “outstanding invoice” when there was no outstanding invoice, and a representation that $6,140 of the seller’s funds would be used to pay off “GE Money Bank for PMSI in appliances” when no such payoff was owed.

The 97 Bradford Street property eventually went into foreclosure and the lender suffered a loss of more than $120,000.

Judge Thompson has scheduled sentencing for June 6, 2011, at which time NOVAK faces a maximum term of imprisonment of five years.

On February 1, 2011, Babar pleaded guilty to multiple federal charges related to his leadership of this extensive mortgage fraud scheme, which has caused losses in excess of $3.2 million to lenders.  He awaits sentencing.

This case is being investigated by the Federal Bureau of Investigation and the U.S. Department of Housing and Urban Development – Office of Inspector General, and is being prosecuted by Assistant United States Attorneys Eric J. Glover, Susan Wines and Liam Brennan.

In July 2009, the U.S. Attorney’s Office and the Federal Bureau of Investigation announced the formation of the Connecticut Mortgage Fraud Task Force to investigate and prosecute mortgage fraud cases and related financial crimes occurring in Connecticut.  In addition to investigating past mortgage fraud schemes, the Task Force will focus on emerging crime trends that are associated with the growing tide of foreclosures, including foreclosure rescue schemes, and short sale schemes.  Citizens are encouraged to report any suspected mortgage fraud activity by calling 203-333-3512 and requesting the Connecticut Mortgage Fraud Task Force, or by sending an email to

The Connecticut Mortgage Fraud Task Force includes representatives from the U.S. Attorney’s Office; Federal Bureau of Investigation; Internal Revenue Service – Criminal Investigation; U.S. Postal Inspection Service; U.S. Department of Housing and Urban Development, Office of Inspector General; Federal Deposit Insurance Corporation, Office of Inspector General, and State of Connecticut Department of Banking.

To report financial fraud crimes, and to learn more about the President’s Financial Fraud Enforcement Task Force, please visit




Tom Carson
(203) 821-3722





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