Michael David Scott, a 51-year-old former Mansfield real estate broker, has pleaded guilty to fraud in a years-long mortgage fraud scheme that resulted in foreclosures of dozens of Boston properties and left some of its many victims with crippling debt and ruined credit.
Scott was the subject of a lengthy investigative piece by The Boston Globe in 2009 that detailed how he misled property investors into buying condos he owned in Roxbury and Dorchester, and failed to both fix up the properties and pay their mortgages as he had promised.
Documents filed by prosecutors in US Federal Court in Boston said Scott had pleaded guilty to duping “the buyers of nearly 180 condominiums into fraud with disastrous results to their finances and long term damage to their credit, all for Scott’s own personal benefit.”
First charged in 2010, Scott pleaded guilty in late May to 57 counts of wire fraud, bank fraud, and money laundering. He is scheduled to be sentenced in August. Prosecutors said guidelines for the charges indicate that Scott could face more than 22 years in prison. He is also awaiting a second trial, scheduled to begin later this year, on additional fraud charges resulting from real estate deals.
Two attorneys for Scott did not respond to requests for comment.
Stuart Schrier, a Dorchester real estate lawyer who once represented one of Scott’s creditors, said the real estate developer was a destructive force.
“He destroyed the neighborhood,” Schrier said. “He could afford to overpay because he was flipping them for so much, so he drove up the prices and pushed honest buyers out of the market.”
Schrier said the fraud even ate into his own business closing real estate transactions because many were ultimately tied to Scott.
“Every time I was about to do a deal, I would find out it was another one of his crazy deals with fake deposits, so I’d have to decline to close it,” Schrier said. “I made no money for years.”
According to a release from the office of US Attorney Carmen M. Ortiz and the 2009 Globe story, Scott bought up dozens of multifamily residences in Roxbury and Dorchester in the mid-2000s, then quickly sold off individual units inside each house as condos, earning more than he had paid for the home as a whole.
He would then induce the condo buyers to take out mortgages and allegedly fudged the paperwork to make it seem as if the buyers had higher incomes and had made substantial down payments. Scott told the buyers they would not be responsible for the loan payments, and promised to fix up the rundown units and sell them at a profit for the buyers.
Scott employed two out-of-state accomplices to help recruit the condo buyers, who in many cases lived outside Massachusetts.
When the real estate market collapsed in 2008, Scott allegedly stopped making payments on many of the mortgages. The resulting forecloses of those properties destroyed the finances and credit ratings of many buyers.
For a time after the 2010 indictment, Scott continued to be involved in real estate deals while the charges were pending. He later surrendered his license to the state Division of Professional Licensure.
Court records show that Scott has been jailed since March 25, 2014, when he was arrested again for fraud in a separate case. Federal prosecutors in that case said that even after giving up his license in 2012, Scott continued to defraud a number of real estate investors, allegedly netting $694,000.
If convicted of the new charges, prosecutors said, Scott could face a sentence of at least 17 years and 6 months.
Scott’s lawyers asked in a federal court motion this month that he be released before his Aug. 26 sentencing for the 2010 indictments, saying he needed time to “get his affairs in order.” The motion noted that Scott, who is from Trinidad and Tobago, but has been a US citizen since 1992, has already surrendered his US and Trinidadian passports. Scott’s lawyers even offered to put up his Mansfield home and his aunt’s condominium as a guarantee that he will not flee.
Prosecutors, on the other hand, said Scott is a significant flight risk and “an economic danger to the community.”
Lawyers for both sides noted that Scott served as the treasurer of First Baptist Church in Mansfield for more than a decade, and that the church’s pastor has appeared in court to support Scott — but prosectors said the charges in his second trial include allegations that Scott defrauded the Church of God House of Deliverance in Dorchester of $69,000.
The others whom prosecutors said helped Scott in his scheme, Jerrold Fowler, 31, and Thursa Raetz, 40, both of Norfolk Va., each pleaded guilty to counts of wire fraud, prosecutors said.Dan Adams can be reached at firstname.lastname@example.org. Follow him on Twitter @DanielAdams86.