Attorney sentenced for role in mortgage frauds

Source: Pittsburgh Post-Gazette

An attorney involved in several local mortgage fraud cases, including some involving Beechview developer Bernardo Katz, was sentenced in federal court today to 57 months in prison.

John Chaffo Jr. of Murrysville was the lawyer involved in 57 fraudulent property sale closings from 2000 through 2007, Assistant U.S. Attorney Brendan Conway told Senior U.S. District Judge Donetta W. Ambrose, who oversaw the July trial at which he was found guilty of 11 of 13 counts. "He obviously committed this massive mortgage fraud and he violated his fiduciary obligations to the bank," Mr. Conway said. "He violated every ethics rule in the book."

Mr. Chaffo's attorney, James A. Wymard, countered that the fraudulent closings represented just a few percent of the defendant's 300 closings per year, and that he never charged more than his standard $300 to $500 rate. "He didn't make any money off of this thing," Mr. Wymard said.

The fraud couldn't have occurred, said Mr. Conway, without an attorney who "allayed the fears of many of the people involved, so they signed [mortgage] documents to their detriment."

The date of Mr. Chaffo's imprisonment will be set by the federal Bureau of Prisons. After his prison term, he will serve three years of supervised release. The sentence was based on the judge's finding that Mr. Chaffo was responsible for between $1 million and $2.5 million in losses by banks -- a figure lower than the prosecution's calculation that he caused $4.5 million in losses.

Mr. Chaffo was convicted of wire fraud and conspiracy for serving as the attorney at closings involving the following: Mr. Katz, who is now a fugitive; mortgage broker Michael Dokmanovich, who was sentenced to 41 months in prison; landlord John Orth, who was sentenced to 15 months in prison; and other buyers and sellers.

The group conspired to inflate the values of properties, exaggerate the creditworthiness of buyers, create the illusion of down payments and thereby get otherwise unjustifiable mortgages from banks.

URL to original article: http://www.housingwire.com/2010/12/08/attorney-sentenced-for-role-in-mortgage-frauds