Six accused in Mass. mortgage scam

By Jenifer B. McKim, Globe Staff

Three real estate investors, two mortgage brokers and a former attorney were indicted in an alleged mortgage fraud scheme involving $12.5 million in loans and at least 26 distressed properties in the Boston area, the state attorney general's office said today.

In indictments returned by a Suffolk County grand jury, the six defendants face multiple counts of larceny and other charges related to a scheme that prosecutors allege gained them about $2 million in profits. Officials say they used false documents to defraud the homeowners and more than a dozen lenders.

Those charged include real estate investors Joshua Brown, 29, of Brockton; Brian Frank, 32, of New Hartford, NY; and John Sweetland, 28, of Yorba Linda, Calif; mortgage brokers Linda Defeo, 28, of Springfield, Brian Arrington, 39, of Boston; and former attorney Bruce Namenson, 47, of Walpole who has been disbarred and already is in jail on unrelated charges.

Attorney General Martha Coakley said Brown, Frank and Sweetland – connected with a company called Boston Equity Investments -- allegedly targeted owners of properties that had been on the market for a long time, persuading them to give the company an “option” to sell the homes at lower prices. They then allegedly found buyers to buy the properties as investments, promising to help "renovate, rent and resell” them, Coakley said.

They also conspired with the mortgage brokers and Namenson to help the buyers obtain loans by using false documentation, according to the state. The money borrowed exceeded the selling prices, however, allowing Boston Equity to pocket the difference, according to prosecutors. In the end, almost all of the homes were foreclosed upon at significant loss to the buyers and lenders, the state said

 “It created a Ponzi scheme of real estate,’’ Coakley said at a press conference.

Brown was arrested yesterday and released on $75,000 bail; Frank was arrested Saturday in New York, authorities said. Defeo, Arrington and Namenson have been summoned to appear in Suffolk Superior Court next month. In 2008, Namenson was sentenced to five years in prison after pleading guilty in a scam to inflate medical bills submitted to insurance companies. There is a warrant out for Sweetland’s arrest.

None of the defendants could be reached for comment.