Tuesday, 28-year-old Isaura Guzman of New London was sentenced to 37 months in prison for fraud.
But the conviction and sentencing is just one in a line of 15 so far of people involved with a massive mortgage fraud organized by Guzman’s father, Waterford’s Jose Guzman. The scam, which lasted from 2004 to 2007, led to more than 200 fraudulent mortgages equaling more than $9 million in bad loans and a litany of foreclosures across New London County, according to the David Fein, the United States Attorney for the District of Connecticut.
How The Scam Worked
In 2004, Guzman, attorney Maurizio Lancia, Stacey Petro and William Athan, among others, created several mortgage companies with the intention of buying and selling properties, mostly homes in New London County. The goal was to bribe buyers and fool lenders into getting loans for properties for far more than they were worth, with the intention of not paying them back.
The scam would begin with Guzman and his associates telling somebody, generally somebody with good credit but not much income, to buy a property they didn’t intend to live in, with the promise of money later, according to Fein.
Then that person would apply to mortgage lenders to buy the property with false information such as income, assets, employment, rent history, as well as the borrower's intention to make the property his or her primary residence, according to Fein. In many cases, the loan was approved.
Guzman and his associates would make money off the loan in several ways. First, they would derive large commissions and fees for processing the mortgage. They also would increase the size of the loan with a promise to do work on the property, and then never do work on the property and pocket the cash, according to Fein. Thirdly, and not exclusively, they would rent the properties and keep that income instead of paying off the mortgage, according to Fein. Guzman would also try to sell the properties.
The people who secured the loans were paid as part of the plan as well, and some of those people were convicted and sentenced to prison, according to Fein. For example, Maria Logan was one such buyer who was paid $27,000 for her role in the purchase of five properties, and was convicted and later sentenced in April to two years in prison followed by two years of supervised release, according to a press release from Fein’s office.
Isaura Guzman was part of these scheme as well, recruiting at least three people to act as borrowers and also being involved in the buying and/or selling of four properties, according to a release from Fein’s office.
Lancia was sentenced in April to 27 months in prison, Jose Guzman has plead guilty to charges stemming from the scam and is awaiting sentencing.