The Boston Globe from Boston, Massachusetts • B3

AUGUST 29, 2010 Boston Sunday Globe Metro B3 Boston developer indicted in easy-money condo pitch $84,000 at the time, bought four properties from Scott. The Grieffs told the Globe they signed blank mortgage applications and legal documents giving Scott and his associates authority to buy on their behalf. Many regretted the deals when the bank deposits they relied on from Scott dried up. Some of the properties went into foreclosure and had to be boarded up by the city because of health and safety violations. In the indictment, Scott is accused of 28 counts of wire fraud, 12 counts of bank fraud, and 22 counts of money laundering after an investigation by the Federal Bureau of Investigation and the Internal Revenue Service.

Scott and his associates allegedly recruited investors, selling them a too-good-to-be-true dream a no money down "investment opportunity." Scott falsified key information on buyers' applications to mortgage lenders, including buyers' income, assets, down payment, and residence, prosecutors said. The indictment also refers to associates who "acted in concert with Scott," though they are not identified by name. They "included individuals who recruited others to act as 'straw one or more bank or credit union officer who created fraudulent verifications of deposits one or more mortgage originator and mortgage broker who assisted in the creation and submission of fraudulent mortgage loan applications and one or more closing attorneys." Scott has been summoned to appear in US District Court in Boston on Sept. 13. PHOTOS BY WINSLOW TOWNSON FORTHE BOSTON GLOBE By Megan Woolhouse GLOBE STAFF A Boston developer has been indicted on federal fraud charges in a real estate scheme that left a trail of abandoned and blighted properties in already struggling city neighborhoods.

Michael David Scott of Mansfield, the 44-year-old owner of Southeast Properties, was indicted Thursday on 62 counts of wire fraud, bank fraud, and money laundering in US District Court in Boston, according to the US attorney's office. He is accused of falsifying loan information that allowed borrowers including many with modest incomes to obtain hundreds of thousands of dollars in loans and buy condominiums in Roxbury and Dorchester at the height of the housing price bubble. Neither Scott nor his Boston lawyer, former federal prosecutor William Kettlewell, responded to requests for comment yesterday. If convicted, Scott faces fines and 10 to 30 years in jail for each charge. US Attorney Carmen M.

Ortiz said the scheme wreaked havoc not only for buyers and lenders but for residents who live in those neighborhoods. "Frauds of this kind line the pockets of unscrupulous schemers at the expense not only of mortgage lenders, but of so many homeowners who saw property values in whole neighborhoods decimated," Ortiz stated in a statement. The Globe reported on Scott's failed real estate dealings in February and December 2009. The newspaper's analysis of Suffolk County deeds showed that Scott and his associates bought at least 50 buildings in Roxbury and Dorchester for $26.6 million be- JOHN TLUMACKIGLOBE STAFF Michael David Scott, shown in December, is slated to appear in court Sept. 13.

tween 2004 and 2008 and converted them into 169 condominiums, which sold for $49.8 million. In December, 101 units were in foreclosure, the Globe reported. The FBI would not confirm or deny investigating at the time, but more than a dozen home buyers told the Globe they fell for Scott's sales pitch. They said Scott promised to regularly deposit rental income in their bank accounts that would cover their mortgage costs. Eager to profit off the booming housing market, several buyers said they planned to sell the condos after a few years.

Buyers included a 27-year-old Navy enlistee in Virginia Beach, a single mother in New Jersey, and a 21 -year-old software engineer also from Virginia. Stacey Grieff, a Virginia schoolteacher, and her husband, Jeremy, who had a combined income of THE SKY'S THE LIMIT It was a perfect day to watch planes perform aerial tricks in the sunny sky yesterday, and that's exactly what spectators at the Boston-Portsmouth Air Show did. Air Guard pilot John Klatt (above) left a trail of smoke as he flew his Panzel S-330 upside down past pilot Rob Holland in his MXZ. The Navy's F-18 Blue Angels (left) flew in formation. The air show continues today.

Megan Woolhouse can be reached at mwoolhouse globe. com. Fires in old Lawrence paper mill suspicious i Call Now! i Central Air Conditioning for homes with hot water or steam radiator heat. If a home doesn't have forced air heat, installing ductwork for central air conditioning can mean major remodeling and expense. But a Unique Indoor Comfort system doesn't require large metal ductwork or major remodeling.

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"We actually do have to go in and try to locate the fire." State fire Marshal Stephen D. Coan's office is working with local officials to investigate the fires. Coan said last night that it was also suspicious that all four fires broke out in broad daylight on weekends. "It raises it to a higher level," he said. "But the investigation is wide open." indicating it is hazardous or a potential trap for firefighters.

The same system was in place at an abandoned warehouse on Norfolk Avenue in Roxbury and was credited with preventing injuries last weekend, when a nine-alarm blaze erupted. Seeing the a fire official ordered firefighters not to enter the building. It collapsed minutes later. During yesterday's fire, Murphy said firefighters needed to enter the maze-like building, which has gaping holes in the floors where giant machinery once stood, to control the fire. "If we stand by and wait for on High Velocity Air Conditioning; must be installed by November must present coupon during first consultation.

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It was reported at 2:23 p.m., and the first fire crew arrived two minutes later, said acting fire Chief Brian Murphy Murphy said that fire and a second blaze under a nearby bridge on the Merrimac River, as well as two three-alarm fires Aug. 8 in the same complex, might have been intentionally set. "In that mill complex, there's no power, no gas. They're definitely suspicious fires." No injuries were reported in any of the fires. Since the Fire Department lost nearly a quarter of its 100 firefighters July 1 due to budget cuts, it has relied on help from surrounding communities for major fires.

On Aug. 8, when two large fires swept through the old mill, firefighters from 14 communities responded. But the Lawrence department extinguished yesterday's fire after entering the abandoned building and quashing the flames before they grew. At a meeting in Lawrence on Aug. 11, officials from surrounding cities and towns complained about being called on to help so often.

The chairman of North Andover's board of selectmen said his town had assisted Lawrence eight times since the beginning of July. "Everything is going to Lawrence," said Daniel P. Lanen at that meeting, "and Lawrence doesn't have the manpower to respond and help our cities." Firefighters were able to confine yesterday's mill fire to a section of one building, but that required entering a building that fire officials designated a no-go zone, Murphy said. Each of the half dozen main buildings and several smaller interconnecting buildings in the complex is marked by a giant red This room once ran hot and cold. Some rooms are too hot.

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