Three North Shore Men Charged In Salem Real Estate Scheme

BOSTON, MA -- Federal prosecutors say two North Shore men bilked banks of $4.3 million by making at least two dozen fraudulent loans over a 10-year period. Salem real estate developer George Kritopoulos, 46, Joseph Bates III, 38, of Lynnfield, and other men are accused of running a scheme where they submitted false information on behalf of borrowers to banks to purchase properties, mostly in Salem.

Kritopoulos was arrested Friday and charged with one count of conspiracy, two counts of wire fraud, six counts of bank fraud, one count of aiding the preparation of a false income tax return, and one count of obstruction of justice. Bates was charged with one count of conspiracy, three counts of wire fraud, and two counts of bank fraud. A third man, David Plunkett, 52, of Lynn, was charged with one count of bank fraud and one count of aiding in the preparation of a false tax return.

The loan applications showed that the people named were employed by what ended up being shell companies. The applications also inflated the borrower's income and said that they would live in the property being purchased, even when they had no intention of living there. In some instances, charging documents said, Plunkett prepared false tax returns and financial documents for the people recruited borrowers.

The end result was loan defaults and foreclosures, and $4.3 million in losses for the banks. The men are accused of running the scheme of between 2006 and 2015. Kritopoulos is also accused of obstructing justice for encouraging others to make false statements and give forged documents to federal investigators.

The charges of bank fraud and wire fraud each provide for sentences of no greater than 30 years in prison and five years of supervised release. The charge of obstruction of justice provides for a sentence of no greater than 20 years in prison and five years of supervised release. The charge of conspiracy provides for a sentence of no greater than five years in prison and three years of supervised release. The charge of aiding the preparation of false tax returns provides for a sentence of no greater than three years in prison and one year of supervised release.

Each charge also carries a fine of $250,000, or twice the gross gain or loss, whichever is greater. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.

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Patch file photo via Shutterstock.

Dave Copeland can be reached at dave.copeland@patch.com or by calling 617-433-7851. Follow him on Twitter (@CopeWrites) and Facebook (/copewrites).