Business & Tech

South Shore auctioneer gets 4 years in prison for real estate fraud

Daniel J. Flynn III says he regrets he hurt people who trusted him and aims to turn his life around.

Kayana Szymczak for the Boston Globe/File 2015

Daniel J. Flynn III says he regrets he hurt people who trusted him and aims to turn his life around.

Danny Flynn denies none of it.

He acknowledges swindling unwitting investors, including close friends and Boston College classmates, out of at least $9.5 million in real estate scams, although prosecutors say the true magnitude of his theft is more than $21 million.

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He doesn’t dispute using some of the money he stole for personal expenses, such as a $100,000 basement renovation at his Milton home that included a laundry room entertainment system.

“I understand what I did,” said the prominent South Shore auctioneer and real estate professional, reading from a short statement at his sentencing Tuesday in federal court in Boston, “and I’m ashamed to be standing here.”

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For his misdeeds, Daniel J. Flynn III, 54, who pleaded guilty to criminal fraud in February, was sentenced to four years in prison, followed by three years of supervised release.

US District Judge Rya Zobel, who called Flynn’s actions “horrendous,” also barred him from working in real estate after he is freed.

Prior to sentencing, Flynn wrote a letter to Zobel in which he cited numerous factors that led to his criminal activity. Among them: the 2007 collapse of the economy and the resulting burst of the housing bubble; the burden of private school tuition for his five children; “a wife who was accustomed to being a stay-at-home mother”; and the stress of running a business with more than 50 employees.

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With his career, marriage, and personal life simultaneously crumbling, “the pressure to keep all the balls in the air felt crushing” and “the weight of these responsibilities was the tipping point that influenced my decisions going forward,” wrote Flynn, who is going through a divorce with his second wife, Margaret Flynn, the mother of his five children.

“Every decision I made was done with the best of intentions for” his children, wrote Flynn, who has been living with a sister in Weymouth since his Milton home was foreclosed on and sold at auction last year. “I regret that I have hurt the people that have trusted me . . . [and] I hope to turn my life around.”

The prosector, Neil J. Gallagher Jr., had previously asked Zobel to allocate two hours at Flynn’s sentencing for public statements from his victims. But Gallagher said Tuesday that while several people Flynn defrauded were in the courtroom, they decided not to speak because of their “utter embarrassment” at having fallen for his scams and their unwillingness to be identified in the press.

“These are people who are smart, educated, went to Boston College, knew Dan Flynn as a friend and colleague . . . and [want to protect their] reputations as someone who should have known better but were sucked into what he was doing,” Gallagher said.

“Some of them run businesses,” he added, “and don’t want their names put in The Boston Globe as victims of Dan Flynn.”

Gallagher said Flynn has at least 90 victims, who typically invested between $10,000 and $500,000 with him. Some are considered experienced investors, such as the Quincy construction firm Lee Kennedy Co. and Thomas Niedermeyer, cofounder of Liberty Square Asset Management in Boston.

Indeed, Flynn’s federal public defender, Cara McNamara, asked in her sentencing memorandum that the judge take into account “the role of his investors’ willful blindness” and their “sophisticated and educated background” when determining his sentence.

Still, Gallagher noted that Flynn’s crimes were so damaging to some victims that they contributed to the decision by his former business partner, Alexander “Alec” Petro, founder of the Duxbury investment firm Bay Hill Capital Management, to take his own life at age 51 in December 2014.

Flynn has acknowledged that he sometimes took investors’ money even when he knew he couldn’t finish his real estate development projects.

And despite Flynn’s claims that he was just trying to keep his business afloat and provide for his family, Gallagher noted that Flynn used some of his stolen proceeds on personal luxuries like $60,000 in walnut cabinets for his home. “This is nothing but selfish predator behavior . . . and deserves incarceration,” Gallagher said.

During his sentencing, Flynn was composed and relatively upbeat, chatting amiably afterward with some of his supporters in the courtroom.

More than 20 letters of support were submitted, including from Quincy Mayor Thomas P. Koch and Norfolk County Sheriff Michael G. Bellotti, both lifelong friends of Flynn.

“I believe he has accepted responsibility for his inexcusable crimes,” Bellotti wrote. “I also believe in second chances . . . and I hope Dan Flynn will have the chance to prove his contrition.”

Koch, writing that “Dan has many family and friends, including me, who are willing to do what we can to help him move forward with his life and address the harms and the pain his actions have caused,” asked the judge to “impose a sentence that allows for that process to begin as quickly as possible.”

Three of Flynn’s six sisters attended his sentencing, and letters of support were submitted by all of them, as well as by some of his nieces, his godchildren, and his former religious studies teacher at Boston College High School.

Gallagher described how Flynn defrauded his victims this way: “He used his street cred to convince them to give him lots of money.”

Flynn founded Quincy-based Daniel J. Flynn & Co., which ran a lucrative auction business during the foreclosure crisis. He was also a popular charity auctioneer for prominent nonprofits like the Jimmy Fund and Boston Ballet. His work gave him frequent access to deep-pocketed business people and philanthropists.

Funny, personable, and politically connected, Flynn made business pitches that involved investing in real estate funds, buying distressed properties cheaply, and making loans he claimed would reap 15 to 20 percent rates of return.

He even persuaded some people to contribute to funds he said would generate returns of more than 200 percent.

He also told prospective investors that his status as a real estate insider gave him special knowledge of potentially lucrative deals.

FBI officials say that, in a series of schemes going back at least eight years, Flynn forged financial documents to make his funds look more valuable than they were; used investor money to repay prior investors or for personal expenses; and often changed the names of his businesses to conceal his fraudulent activities.

Flynn was arrested at his home in August 2015.

Some of Flynn’s victims and their lawyers now say they feel foolish for having entrusted him with their money. But he was so widely known and liked, and had such impressive credentials, they say, that they ignored their doubts.

The amount Flynn owes to his victims has yet to be determined, but “in all likelihood Dan Flynn will never pay a dime back to anyone,” Gallagher said.

In his statement to the court, Flynn said that “instead of admitting I was underwater and struggling, I kept going, hoping it would work out.”

The volume of supportive letters submitted on his behalf, he added, “gives me hope I’ll be able to turn my life around and become a good member of society.”

Sacha Pfeiffer can be reached at pfeiffer@globe.com. Follow her on Twitter @SachaPfeiffer.
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