Southington Man Indicted in Federal Mortgage Fraud Case

A New Haven federal grand jury has returned an indictment against a 60-year-old Southington man that U.S. District Court officials said he created a fake construction company in order to commit wire fraud and money laundering as part of a 2007 mortgage fraud scheme.

U.S. Attorney David B. Fein, of the District of Connecticut, said Tuesday an FBI investigation revealed that Henry J. Papale set up a scheme to fraudulently receive $255,000 after working alongside a second, unnamed man to take money that was intended for home repairs in Florida.

Papale is facing charges including four counts of money laundering and eight counts of wire fraud related to the transactions. An indictment is a federal allegation and does not indicate guilt.

Court documents indicated that in 2007, Papale convinced two potential homebuyers to use their names and credit information to purchase four homes in Florida. He sold the idea as an investment for the homebuyers and then used the information to obtain mortgage financing in their names.

Papale proceeded to submit fraudulent invoices and work authorizations for the four properties, using a fake construction company as the payee. After the properties were closed, the settlement agent transferred funds in the amount of $360,307.23.

Court officials said an investigation determined that the money was then transferred into the Connecticut bank account of the second, unnamed man. Papale then had $255,500 transferred from that acoount into his own bank account and eventually into an investment trading account.

The court said Papale allegedly never made the mortgage payments due on the properties, resulting in the homeowners being delinquent.

If convicted, Papale is facing a maximum prison term of 20 years for each count of wire fraud and an additional 10 years per count for money laundering, court officials said.

Papale , two counts of wire fraud, stemming from an indictment in September 2011.