A former Oakland County, Mich., lawyer was sentenced Jan. 30, 2020, to serve 70 months in federal custody on one count of conspiracy to commit bank fraud, and three counts of bank fraud, U.S. Attorney Matthew Schneider announced.
Paul Nicoletti, 60, received the sentence from Victoria A. Roberts, U.S. District Judge, in Detroit. Roberts also ordered that the defendant serve two years on supervised release after his release from federal custody and pay restitution totaling $5,299,751.58.
A jury returned guilty verdicts against Nicoletti on May 5, 2019, after a seven-day trial.
According to the evidence introduced during the trial, Nicoletti, a lawyer and owner of a title company in Bloomfield Hills, Mich., became involved in a scheme to obtain large mortgage loans from Fifth Third Mortgage, Michigan, a lending arm of Fifth Third Bank.
Although somewhat complicated, the essence of the scheme involved real estate developers, a corrupt loan officer and Nicoletti working together to obtain large mortgage loans from Fifth Third Mortgage, Michigan, purportedly for the purchase and development of high-end properties in Bloomfield Hills and Birmingham, Mich., based on numerous false statements both in the application and closing process of the loans, resulting in Fifth Third Mortgage, Michigan releasing more than $8 million in loan proceeds.
More specifically, one or more of the conspirators would find and recruit straw buyers to serve as mortgage loan applicants for the purchase of real property which the conspirators wanted to purchase and develop. The straw buyers, who viewed themselves as investors, were paid a fee for the use of their names and credit histories in the loan applications and real estate transactions, and were promised a portion of the expected profit after the property was developed and resold.
The straw buyers had no intention of living at or actually exercising ownership and control of the property, despite representations to the contrary in their applications, and in closing documents. Despite their good credit ratings, the straw buyers did not have the assets or income necessary to qualify for mortgages in the substantial amounts sought. Thus, false information pertaining to their income and assets was included in the mortgage loan applications to qualify them.
Nicoletti’s role was to facilitate the fraudulent loans as the title agent by, among other things, falsely verifying that the borrowers made substantial down payments on the properties. To do so, Nicoletti obtained cashiers checks, issued after the loan proceeds were released to his Continental Title account and which were funded by the loan proceeds themselves, bearing the names of the straw buyers as “remitters,” which he then re-deposited into his Continental Title account, making it appear as though the borrowers funded the substantial downpayments.
In fact, the borrowers brought no money to the closings. When the fraud was discovered by authorities, Nicoletti counseled the destruction of evidence of the fraud and also personally destroyed relevant electronic and paper records.
Nicoletti was the sixth person convicted as a result of this investigation. The loan officer, a mortgage broker, an appraiser and several of the real estate developers previously have been sentenced after entering guilty pleas relating to the scheme. The investigation was conducted by the Federal Bureau of Investigation and prosecuted by Assistant U.S. Attorneys Craig Weier and John Neal.