Yesterday a federal grand jury sitting in New Haven, Connecticut, returned an 11-count indictment charging Steven J. Kottage, 44, and Genaro R. Hathaway, 46, both of Weston, and Mary Ellen Durso, 53, of Milford, with conspiracy and other offenses stemming from the individuals’ alleged involvement in mortgage fraud.
Keep in mind that when a grand jury returns an indictment, they have only heard the government’s version of the events. The grand jury has seen no evidence, has not heard from the individuals being investigated, and is not held to the reasonable doubt standard.
The indictment alleges that Kottage and Hathaway, who are married, conspired to commit wire fraud relating to a home on Fire Island, New York. Hathaway, a former attorney in Connecticut and New York, and Kottage purchased and financed the property in the name of Kottage’s mother by filing supposed false loan applications to Wells Fargo Home Mortgage. In each instance, Hathaway served as the closing attorney on behalf of Kottage’s mother and Wells Fargo. The indictment further alleges that Hathaway subsequently purchased the property from Kottage’s mother’s estate in his own name and, in so doing, made a materially false loan application to H&R Block Home Mortgage to obtain a separate mortgage. Allegedly, rather than using the sale proceeds due and owing to Kottage’s mother’s estate to pay off the outstanding loans issued by Wells Fargo, Kottage and Hathaway used those proceeds to pay off an obligation arising from a separate real estate transaction in which Hathaway served as the closing attorney for the seller. The indictment alleges losses exceeding $500,000.
The indictment further alleges that Kottage, Hathaway, and Durso conspired to commit bank fraud by filing a materially false loan application to Washington Mutual to refinance a condominium in Hillsboro Beach, Florida. Supposedly, Durso served as the straw owner for the condo in order to obtain the fraudulent loan proceeds for the benefit of Kottage and Hathaway.
The indictment also charges Hathaway with tax evasion in 2005 and Durso with filing false tax returns from 2004 to 2008.
The indictment charges Kottage and Hathaway with two counts and Durso with one count of conspiracy, a charge that carries a maximum term of imprisonment of 30 years on each count. The indictment further charges Kottage and Hathaway with two counts of wire fraud, a charge that carries a maximum term of imprisonment of 30 years on each count. Kottage, Hathaway and Durso are each charged with one count of bank fraud, which carries a maximum term of imprisonment of 30 years. The one count of tax evasion against Hathaway carries a maximum term of imprisonment of five years, and the five counts of filing false tax returns against Durso carry a maximum term of imprisonment of three years, on each count.
What is interesting about this indictment is the fact that the government has attempted to throw in every charge they can think of against these individuals. It seems that once the government decided to indict the accused with the fraudulent scheme, they wanted to add as much into the indictment as possible, for example, the tax evasion and false tax return charges. The government wants to imprison these individuals for unrelated events, and unfortunately, if this case goes to trial and the accused are found guilty, the additional offenses will have a detrimental effect on the individuals’ ultimate sentence.
Douglas McNabb, Erich Ferrari and other members of the firm practice and write extensively on matters involving Federal Criminal Defense, International Extradition and OFAC litigation.
The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbferrari.com or a member of the firm at any location near you.
Posted by McNabb Ferrari, P.C. 