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A former real estate investor was found guilty of participating in a complex scheme to defraud homebuyers and mortgage lenders in the Boston area, Attorney General Martha Coakley said Friday.
Joshua Brown, 31, of Brentwood, N.H., was convicted Thursday by a Suffolk Superior Court jury after a three-week trial of 26 counts of larceny over $250 and other charges. He was scheduled to be sentenced on Nov. 10.
Five other defendants who were indicted in 2009 had previously entered guilty pleas, according to the attorney general.
The charges involved approximately $12.5 million in loans from more than a dozen financial institutions that were used to purchase 26 multifamily homes. Prosecutors said Brown, the former head of Boston Equity Investments, used inflated property appraisals and other fraudulent documents to obtain the loans, while at the same time convincing the owners of the properties to give BEI an option to sell the home at below list prices.
The company would then pocket the difference between the sale price and the maximum amount of financing that BEI was able to secure in the buyers' name, prosecutors said.
Potential buyers were recruited into the scheme with false promises that the properties would be renovated, rented and resold, the state alleged. Most of the homes were later foreclosed on.
"The defendants in this case corrupted every aspect of the real estate industry for their personal financial gain and at the expense of lenders, homebuyers, and communities in Boston, which were left with abandoned and foreclosed homes," Coakley said in a statement announcing the guilty verdict.
The scheme fraudulently netted the defendants more than $2 million, with Brown pocketing $1.5 million that he used to finance an extravagant lifestyle, Coakley said.
The defendants who previously entered guilty pleas in the case were real estate investors John Sweetland, of Yorba Linda, Calif., and Brian Frank, of New Hartford, N.Y.; mortgage brokers Brian Arrington of Boston and Linda Defeo of Springfield, Mass.; and former attorney Bruce Namenson, of Walpole, Mass.
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