DANBURY ATTORNEY SENTENCED TO PRISON
IN CONNECTION WITH MORTGAGE FRAUD CONSPIRACY
David B. Fein, United States Attorney for the District of Connecticut, announced that LUCY DeMELO, 39, of Danbury, was sentenced on April 4, 2012, by Senior United States District Judge Alfred V. Covello in Hartford to six months and a day in prison to be followed by six months of home confinement for participating in a mortgage fraud conspiracy. The home confinement was ordered as part of a three-year term of supervised release.
According to court documents and statements made in court, DeMELO was an attorney with an office in Danbury where she practiced real estate law. In connection with her legal practice, DeMELO agreed to participate in a conspiracy to commit mortgage fraud. As part of the conspiracy, DeMELO knowingly created false documentation at the request of a loan originator and made other misrepresentations in connection with loan closings. The false documentation she created included letters falsely claiming that she was in possession of funds deposited by prospective buyers as down payments for residential real estate transactions. These documents were used to qualify prospective borrowers for mortgage loans. The defendant also generated false HUD-1 settlement statements which falsely reflected the distribution of the proceeds of the loans and/or misrepresented who the true purchaser of the real estate was. For instance, DeMELO admitted knowing that, on some occasions, the purported purchaser of the property was in fact merely a straw buyer acting as a nominee for her co-conspirator. Many of these loans eventually ended up in default resulting in lenders foreclosing on the properties.
As part of the sentence, Judge Covello also ordered DeMELO to pay $828,104 in restitution.
On June 22, 2010, DeMELO pleaded guilty to one count of conspiracy to commit mail and wire fraud.
This matter is being investigated by the Internal Revenue Service - Criminal Investigation. The case is being prosecuted by Assistant U.S. Attorney Paul Murphy.
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