Waterford man sentenced in mortgage fraud scheme

A Waterford man who participated in a large-scale mortgage fraud scheme involving multiple properties in New London in 2006 and 2007 was sentenced in U.S. District Court Monday to 12 months and one day in prison followed by five years of supervised release.

Juan Velez, 60, had pleaded guilty to bank fraud on June 20, 2013, admitting that he was involved in the fraudulent transaction of a property located at 624-626 Montauk Ave.

Velez was involved in a scheme led by New London mortgage originator Jose Guzman, who has pleaded guilty and awaits sentencing. According to the U.S. Attorney’s office, Velez sold the property to Flavia Mendoza, a co-defendant in the case, at an inflated price using a fraudulently obtained mortgage loan. The loan paperwork contained multiple false statements, including information related to Mendoza’s income, her intention to occupy the property as her primary residence and the amount of money she was providing to purchase the property.  The  Housing and Urban Development Settlement Statement form (“HUD-1”), which Velez signed, falsely stated that Mendoza had provided Velez with approximately $29,760 for the purchase of the property when Mendoza had not, in fact,  provided any down payment money for the transaction.  Based on these false statements, Mendoza obtained a mortgage loan in the amount of $492,699 from the bank.

Velez, Mendoza and others shared the profits of this and other fraudulently obtained residential mortgage loans, which totaled more than $1.2 million. Mendoza has pleaded guilty and awaits sentencing.

At the sentencing in federal court in Hartford, U.S. District Judge Robert N. Chatigny ordered Velez to spend the first six months of his supervised release in home confinement and to perform 120 hours of community service. Chatigny also ordered Velez to pay restitution in the amount of $908,695.64 to four victim financial institutions.

The case was investigated by the U.S. Postal Inspection Service, the Internal Revenue Service – Criminal Investigation and the Federal Bureau of Investigation and is being prosecuted by Assistant U.S. Attorneys Michael S. McGarry and Peter S. Jongbloed.


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