August 1, 2013

Jury convicts N.H. man in $13 million mortgage fraud

Michael Prieto was accused in a scheme that included straw buyers and falsified mortgage applications, and targeted homeowners in distress and mortgage companies anxious to bundle and sell mortgages.

By Lynne Tuohy / The Associated Press

CONCORD, N.H. — A New Hampshire businessman was convicted of fraud Thursday for orchestrating an elaborate scheme to strip the equity of homes on the brink of foreclosure by falsifying information on dozens of mortgage applications.

click image to enlarge

In this photo taken through a glass door, Michael Prieto, right, enters the Federal Courthouse in Concord, N.H., last week. Prieto was convicted Thursday in an elaborate mortgage fraud scheme that prosecutors say bilked distressed homeowners and banks out of about $13 million.

The Associated Press

Beginning in 2005, Michael Prieto of Manchester mailed offers to help bail out distressed homeowners if they signed over to him the deeds to their homes. He then sold those homes at inflated prices to straw buyers he paid to sign off on the false mortgage applications and turn the checks over to him, jurors found after hours of deliberation.

Prieto dropped his head to his chest at the word "guilty" and later expressed disbelief to his lawyers and family members gathered in the courtroom.

"I thought we had this won," he said to his lawyers.

Prieto faces up to 20 years in prison and could get an additional 19 years because some of the lenders were federally insured. Sentencing was scheduled for Nov. 12, and Prieto was allowed to remain free until then.

"Justice was served," prosecutor Mark Zuckerman said. "We're gratified by that."

Prieto declined to comment. His attorney, Michael Iacopino, would say only, "We're disappointed."

Assistant U.S. Attorney Michael Gunnison told jurors that from 2005 to 2008, Prieto targeted distressed homeowners through newspaper legal notices and sent letters offering to bail them out. He persuaded them to turn over the deeds to their homes in exchange for the opportunity to continue living in their homes as rent-paying tenants, and gave them the option to purchase back their homes in two years, Gunnison said.

Then, prosecutors say, Prieto sold the homes at inflated prices to straw buyers whom he paid to file mortgage applications that falsified their income, assets, debts and other facts. Prieto then stripped the equity from the homes and pocketed thousands of dollars, Gunnison said, using some proceeds for trips to a casino.

"Was this a scheme about the defendant helping people?" Gunnison queried. "No. This was a scheme about the defendant helping himself – to obtain money and live large as long as he could keep the scheme going."

As a former loan officer for Countrywide mortgage company, Gunnison said Prieto knew the mortgage business, its vulnerabilities and how to exploit them.

Prieto's lawyer said his client ran a failing business, not a criminal enterprise.

"He ain't a good businessman," Iacopino told jurors, his hand resting on Prieto's shoulder. "But he's not a swindler and he's not a thief."

Earlier in the day, U.S. District Court Judge Steven McAuliffe threw out nine counts of money laundering in furtherance of the mail fraud scheme, saying those charges are part of the overarching scheme alleged by prosecutors.

Were you interviewed for this story? If so, please fill out our accuracy form

Send question/comment to the editors

Further Discussion

Here at we value our readers and are committed to growing our community by encouraging you to add to the discussion. To ensure conscientious dialogue we have implemented a strict no-bullying policy. To participate, you must follow our Terms of Use.

Questions about the article? Add them below and we’ll try to answer them or do a follow-up post as soon as we can. Technical problems? Email them to us with an exact description of the problem. Make sure to include:
  • Type of computer or mobile device your are using
  • Exact operating system and browser you are viewing the site on (TIP: You can easily determine your operating system here.)