A Mansfield developer and real estate broker awaiting trial on federal mortgage fraud charges related to a string of foreclosed properties in Dorchester and Roxbury has surrendered his Massachusetts real estate license, the state Division of Professional Licensure said Tuesday.
Michael David Scott has also agreed not to renew his license or ever apply to the board for “licensure of any kind,’’ the state said in a press release. In addition, Scott must transfer any funds he holds because of his real estate job to a Boston area law firm and notify clients that he can no longer represent them as a licensed broker, the state said.
Scott’s attorney, William Kettlewell, could not be reached for comment and licensure division spokesman Dan Rosenfeld would not say why Scott agreed to give up his real estate license.
Scott’s official exit from the local real estate business comes two weeks after a Boston Globe story revealed that state regulations allowed him to keep working in the industry despite the federal case, prompting concerns among other Massachusetts real estate professionals.
Scott had started a new company, The Crawford Group LLC, based in Quincy focusing on properties owned by homeowners forced into short sales. That’s when a property is sold for less than the size of the mortgage, with approval from the lender.
While Massachusetts law does not prohibit a real estate broker under criminal indictment from working while a case moves through the court system, the state does have the power to suspend or revoke a license based on its own finding of wrongdoing. Last month, Rosenfeld said the state launched an investigation into Scott’s business practices shortly after the fraud charges were unveiled in US District Court in Boston in 2010. The state “voluntarily stayed’’ the inquiry to avoid affecting the federal case, he said.
Jessie Cuddy, a real estate broker with Boston Bayside Properties in Dorchester who had complained to the board about Scott, welcomed the news Tuesday.
“A piece of justice has been served,’’ she said.
Melvin Vieira Jr., an agent with Re/Max Landmark Realtors in Milton, said, “Finally, the system is working.’’
Scott, 46, is awaiting trial after pleading not guilty in federal court to 68 criminal counts related to allegations that he cheated mortgage lenders. The charges involve the sales of dozens of Dorchester and Roxbury condominiums between 2006 and 2008.
Prosecutors say that Scott, two out-of-state recruiters, and others obtained funds to finance deals through “false and fraudulent pretenses’’ in a scam involving the conversion of multiple-family homes into condominiums, many of which went into foreclosure.
Prosecutors say that as part of the alleged scheme Scott and his partners recruited people to purchase units as investments. The buyers were allegedly told they wouldn’t be responsible for down payments or closing costs, that the mortgage would be covered by rents, and that they would share in profits when the properties were sold.
Lenders, in turn, were given financial information that inflated the buyers’ assets, overpriced properties, and falsely indicated the new owners planned to live in the homes, prosecutors say.
Eventually, most of the condos went into mortgage default and Scott made off with the sale proceeds, some of which he passed on to his partners, the government alleges.
Scott’s next hearing is scheduled for May.
Jenifer B. McKim can be reached at firstname.lastname@example.org.