Former corrections officer sentenced for New Haven mortgage fraud
NEW HAVEN – Former corrections officer Ronald Hutchison Jr., 52, who previously pleaded guilty to an indictment charging him with conspiracy to commit mail and wire fraud, was sentenced on Monday, Feb 9 to 28 months in prison.
The sentence was imposed in New Haven Federal Court for his role in a mortgage fraud scheme arising from the purchases of more than 50 properties in New Haven between 2006 and 2008. According to trial evidence, the New York native and others conspired to defraud mortgage lenders of millions of dollars by inflating the contract price that the property sellers actually agreed to accept, specifically with multi-family properties.
These lower sale prices, approximately $30,000 to $145,000 less than the actual contract price, were not disclosed to the lenders from which the buyers obtained financing, and shortly after a closing, the borrowers would often receive thousands to tens of thousands of dollars in cash back that were not disclosed to the lender.
False HUD-1 forms were submitted to mortgage lenders that did not match another, undisclosed HUD-1 form that was actually used to disburse the fraudulently obtained proceeds at the closing. As a result, mortgages were issued based on inflated sales prices.
Hutchison, a corrections officer at the Westchester County Department of Corrections from 1989-2011, purchased 13 of these properties himself and recruited co-workers to purchase an additional 40 properties. From these, Hutchison received approximately $100,000 cash back, and an additional $200,000 from his co-workers for referral fees. Nearly all of the properties purchased as part of this conspiracy went into default and have been foreclosed upon, causing losses of more than $7 million to lenders.
Hutchison will self-surrender to the Bureau of Prisons by April 10, 2015. In addition to the prison term, he will serve three years of supervised release and pay restitution of $2.6 million.
Ten defendants have been charged and convicted for their participation in this mortgage fraud conspiracy, including two loan officers, four attorneys, two buyers and a real estate agent, and await sentencing.