Manipulated property deals and false bids defrauded banks and federal programs
A Glastonbury real estate agent has been sentenced to prison for orchestrating a fraudulent home flipping scheme involving short sales of government- and bank-owned properties.
James Macchio, 46, who managed a real estate agency, used straw buyers and manipulated renovation costs to profit from flipping undervalued properties, according to the Department of Justice.
Macchio and co-conspirator Sheldon Haag, another real estate agent, used straw buyers, including a shell company disguised as a construction firm, to acquire properties owned by banks, federal agencies, bankruptcy trustees, and other mortgage holders. Acting as brokers for these property owners, they exploited insider knowledge to suppress sale prices, maximizing their gains from later resales.
The fraudulent operation involved submitting inflated renovation bids to property owners. After these bids were accepted, Macchio and his associates hired cheaper contractors and pocketed the difference. The scheme extended to defrauding the Small Business Administration by securing pandemic relief loans to sustain their illicit activities during the COVID-19 crisis.
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Macchio pleaded guilty to one count of conspiracy to commit wire fraud and was sentenced to 42 months in federal prison, followed by two years of supervised release. He has been ordered to forfeit $621,579 and pay at least $2.57 million in restitution.
Macchio's attorney, Todd A. Spodek, noted that the 42-month sentence was a substantial reduction from the recommended guidelines of 121 to 151 months and less than the government’s 91-month recommendation.
Haag, who also pleaded guilty to his role in the conspiracy, received a sentence of one year and one day in prison, followed by supervised release.
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