Second North Andover Company Founder Pleads Guilty In Fraud Case

NORTH ANDOVER, MA — The second co-founder of a North Andover mortgage short sale assistance company pleaded guilty to two charges in a fraud case. Gabriel Tavarez, 40, pleaded guilty to conspiracy to commit wire fraud and aggravated identity theft, June 3.

The other co-founder, Jaime L. Mulvihill, 40, pleaded guilty to conspiracy to commit wire fraud in November. He was sentenced in February to six months in prison.

Prosecutors said that Mulvihill and Tavarez, used their business to defraud mortgage lenders and investors out of nearly $500,000 over about 90 transactions.

In a mortgage short sale, the mortgage lender, such as a bank, agrees to accept the proceeds of a sale for less than the value of the mortgage, in place of foreclosing on the property. Firms like Tavarez and Mulvihill's company Loss Mitigation Services, LLC, negotiate with mortgage lenders to convince them to accept short sales. According to the U.S. Attorney's Office, mortgage lenders generally forbid negotiators like Loss Mitigation Services from receiving any proceeds from the sale.

The two co-founders were charged in November.

According to court documents, Tavarez and Mulvihill made false claims to both sides of short sales, both lenders and homeowners, to enable themselves to take a fee of three percent of the mortgage sale price, from 2014 to 2017. Prosecutors said the duo falsely claimed to homeowners, brokers and closing attorneys that mortgage lenders approved the "seller paid closing costs," while hiding the fees from the lenders by filing altered settlement statements and fabricated contracts and mortgage loan preapproval letters.

"When the short sales closed, at the instruction of Tavarez or Mulvihill, or others working with them, settlement agents paid Loss Mitigation Services the fees, which typically were 3% of the short sale price above and beyond any fees to real estate agents, closing attorneys and others involved in the transaction.," the U.S. Attorney's office wrote.

"To deceive mortgage lenders about the true nature of the fees, Mulvihill or Tavarez filed, or caused others to file, false short sale transaction documents with mortgage lenders, including altered settlement statements and fabricated contracts and mortgage loan preapproval letters," they continued. "Tavarez and Mulvihill fabricated the transaction documents, or caused them to be fabricated, in order to justify the additional fees and conceal that they were being paid to Loss Mitigation Services."

Tavarez also created or had others create fake letters from mortgage brokers claiming they had approved buyers, prosecutors said.

Prosecutors previously said the fraud victims include the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation and the U.S. Department of Housing and Urban Development.

Tavarez is scheduled to be sentenced in October.

"The charge of conspiracy to commit wire fraud provides for a sentence of up 20 years in prison, three years of supervised release, and a fine of $250,000 or twice the gross gain or loss. The charge of aggravated identity theft carries a mandatory two-year sentence that must run consecutively to any other sentence imposed, one year of supervised release, and a fine of $250,000, or twice the gross gain or loss," prosecutors said.

Christopher Huffaker can be reached at 412-265-8353 or chris.huffaker@patch.com.