Long Island Man Sentenced To 55 Months For Stealing More Than $31 Million Dollars In A Wire Fraud Scheme Involving Sub-Prime Mortgages
Defendant Submitted False Financial Records to His Investors
Earlier today, defendant Thomas Donovan, 67, was sentenced to 55 months of incarceration for his guilty plea to wire fraud conspiracy on May 31, 2013. The District Court also entered an order directing Donovan to forfeit more than $31 million that he received and to pay more than $31 million in restitution.
The sentence was announced by Kelly T. Currie, Acting United States Attorney for the Eastern District of New York, and Diego Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI).
According to court filings and facts presented during the sentencing proceeding, Donovan was the co-owner of Private Capital Group that invested in sub-prime mortgages. Private Capital Group’s main investor was Ficus Investments, Inc., which invested more than $300 million. Rather than investing those funds as agreed upon, the owners of Private Capital Group, Thomas Donovan and Lawrence Cline, took more than $31 million for themselves and concealed that theft by providing his investors with false and misleading financial reports. Cline and Private Capital Group’s chief financial officer, Christopher Chalavoutis, previously pleaded guilty and have been sentenced.
“Under the guise of rehabilitating and reselling distressed mortgages, Donovan lied to his investors and stole their money. Donovan took advantage of the residential mortgage crisis for his personal financial gain, and he has now been held to account,” stated Acting United States Attorney Currie. Mr. Currie extended his grateful appreciation to the FBI, who led the government’s investigation.
The government’s case is being prosecuted by the Office’s Long Island Criminal Division. Assistant United States Attorney Christopher Ott is in charge of the prosecution.
The sentence was imposed by the Honorable Joanna Seybert at the federal courthouse in Central Islip, New York.
This prosecution was the result of efforts by President Obama’s Financial Fraud Enforcement Task Force which was created in November 2009 to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ Offices, and state and local partners, it’s the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions, and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit http://www.StopFraud.gov.
E.D.N.Y. Docket No. 12-CR-196