A federal indictment was unsealed last week charging Steven D. Mueffelman and John S. Lombardi in a fifteen- count indictment with mail and wire fraud in the operation of an advance fee scheme in Massachusetts and elsewhere, according to an announcement from the U.S. Attorney. The two men were allegedly operators of a mortgage assistance company that defrauded hundreds of low-income and subprime consumers of over $1 million.
The U.S. Attorney said that from September 1996 through August 1997, Mueffelman and Lombardi — operating under the name Commonwealth Capital Funding Corp., located in Massachusetts — promised “guaranteed home ownership” to hundreds of low income individuals who would not qualify for loans from traditional lenders. The men allegedly collected in excess of one month’s gross income in return for promises of financing, when in reality they had no ability to obtain financing and had no experience in doing so.
The indictment alleges that Mueffelman, of Florida, and Lombardi, of Massachusetts, immediately spent the fees on commissions and overhead and that none of the money was escrowed for closings. Most of the victims were from Massachusetts.
The indictment also alleges that Mueffelman and Lombardi marketed a “revolutionary” program whereby a nonprofit corporation would purchase a home and the consumer would lease the home from the nonprofit until able to assume the mortgage outright. According to the indictment, the men never effected such a lease-purchase option transaction involving a nonprofit corporation.
If convicted, both men face a maximum sentence of 5 years in prison and a $250,000 fine on each count with which they are charged. However, in another recent Massachusetts mortgage fraud case, Raymond T. Jackman, JR., of West Roxbury, Massachusetts, was only sentenced to two years’ probation for allegedly creating false income tax documents — significantly less than the maximum penalty.
