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Justice News

Department of Justice
U.S. Attorney’s Office
District of Massachusetts

FOR IMMEDIATE RELEASE
Tuesday, May 9, 2017

Former Milton Auctioneer Sentenced for Defrauding Investors of $21 Million

BOSTON – A well-known auctioneer was sentenced today in federal court in Boston for defrauding more than 90 victims – many of whom were friends, business associates and sophisticated investors – of more than $21 million.

Acting United States Attorney William D. Weinreb said, “Mr. Flynn preyed upon friends and family, taking their hard earned money with promises of high returns. Instead, he violated their trust, and used their investments to perpetuate an elaborate Ponzi scheme, using the money for his own personal expenses including renovations to his Milton home.”

“Through sophisticated financial schemes, Mr. Flynn took advantage of a wide array of victims, cheating them out of millions of dollars,” said Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division. “This case highlights the FBI's commitment to aggressively following the money, so that financial fraudsters like Flynn - who are motivated by greed - are brought to justice and do not take advantage of the hard working men and women of our communities.”

Daniel J. Flynn III, 54, of Milton, was sentenced by U.S. District Court Senior Judge Rya W. Zobel to four years in prison, three years of supervised release and ordered to pay restitution. In February 2017, Flynn pleaded guilty to nine counts of wire fraud.

Beginning around 2007, Flynn and another individual started a real estate fund called the DJF Real Estate Opportunity Fund (“the Fund”). The fund touted Flynn’s experience in real estate and boasted of an extraordinary rate of return on investments. To convince potential investors that the Fund was solid, Flynn purported to own promissory notes worth millions of dollars and an apartment complex in Quincy. In fact, Flynn fraudulently created the promissory notes and used the Quincy apartment complex to defraud investors.

Specifically, Flynn used the promissory notes to defraud investors by soliciting loans from investors to purchase or invest in a piece of distressed real estate. In return, Flynn gave the investor a promissory note guaranteeing the investor of a 12 to 15 percent return. Although Flynn did make payments to investors, as is typical in a Ponzi scheme, the money came from other victims – not real estate investment profits. In total, Flynn defrauded about 60 individuals and entities of approximately $18.4 million.

In addition, Flynn used the Quincy apartment complex to defraud investors. In 2005, Flynn purchased the property for $995,000. Despite the fact that he already owned the property, Flynn caused the Fund to purchase the apartment complex for approximately $2.2 million. Flynn then convinced some investors to loan him money to develop the units and convinced other investors to loan him money to purchase the property – despite the fact that he already owned it – and promised a 12 to 15 percent profit in return. Flynn never repaid the investors.

Lastly, acting as a real estate broker, Flynn sold two properties in Dorchester generating $451,000 in profits, but never returned the proceeds to the property owner. The property owner later died due to heart failure, but family members recalled that the victim and Flynn were involved in a heated argument about the money.

Acting U.S. Attorney Weinreb and FBI SAC Shaw made the announcement today. Assistant U.S. Attorney Neil J. Gallagher Jr. of Weinreb’s Economic Crimes Unit prosecuted the case.

Topic(s): 
Financial Fraud
Component(s): 
Updated May 9, 2017