The manager of a real estate agency was sentenced in a Boston federal court in connection with a multi-year scheme to defraud his clients through fraudulent short sales of government and bank-owned properties to straw buyers acting under his direction.
James Macchio, 46, of Glastonbury, Conn., was sentenced by U.S. District Court Judge Leo Sorokin to 42 months in prison and two years of supervised release. He was also ordered to forfeit $621,579 and to pay at least $2.6 million in restitution. In May, Macchio pleaded guilty to one count of conspiracy to commit wire fraud.
Macchio and another real estate agent, Sheldon Haag, used straw buyers to acquire properties owned by the clients of Macchio’s brokerage, which included banks, federal agencies, bankruptcy trustees and other mortgage holders. The straw buyers included a shell company set up as a purported construction company.
Macchio and his co-conspirators hid their involvement as the de facto buyers of short sale properties from the owners of the properties and used their inside knowledge as the owners’ broker to minimize sale prices in order to maximize their gain from later “flipping” the properties.
While perpetrating the flipping scheme, Macchio and his co-conspirators further defrauded clients by submitting fraudulent renovation bids from contractors to their own clients, including from a fake construction company they controlled. Once their clients accepted a fraudulent bid, Macchio and his co-conspirators hired different contractors at much lower cost and pocketed the difference.
During the COVID-19 pandemic, Macchio and co-conspirators also defrauded the Small Business Administration by obtaining pandemic relief loans to fund their ongoing real estate fraud scheme.
Haag previously pleaded guilty to his role in the conspiracy and was sentenced in October.