Mass attorney indicted, accused of stealing loan funds

In the following press release from the Massachusetts Attorney General it was announced that a Middlesex Grand Jury returned indictments against a former Somervillereal estate attorney in connection with allegedly making falsestatements on mortgage applications and associated documents and usingthe funds secured from the loans for his own purposes, rather thanpaying off existing loans as directed by the new lenders.  Kevin Carey,age 48, of Middleboro, is charged with Larceny over $250 (8counts) and Willfully Making a False Statement Regarding FinancialCondition or Assets (7 counts).    

Authorities allege that, while practicing as a real estate lawyer inSomerville and Medford, Carey engaged in a scheme called ?mortgagestacking? on four residential properties he or his family membersowned.  The scheme allegedly involved serially refinancing the loans onthese properties, without paying off the existing loans.  Carey wasalso the agent for a New England title insurance company which allowedhim to issue title insurance policies on mortgage transactions heprocessed.  Title insurance policies protect lenders in the event thatthere are defects in the title of the property. 

Authorities allege that on various occasions between April 2002 throughSeptember 2004, Carey performed the functions of closing attorney onmortgage loans on each of the properties involved.  Authorities allegethat Carey ?stacked? three mortgages on a home in Medford, twomortgages each on two different properties in Everett, and one mortgageon his personal residence in Medford.  Carey also allegedly falsifiedinformation on mortgage loan applications by omitting certain mortgageson the various properties, and also signed a family member?s name onfalse mortgage applications and closing documents he created. Authorities also allege that when he received the proceeds of theloans, Carey did not pay off the existing mortgages on theseproperties, but rather used the funds for his own benefit.  Authoritiesfurther allege that Carey issued title insurance policies orcommitments in connection with the transactions, and the lenders weretherefore protected.  However, ultimately the title insurance companysuffered the financial loss.  Authorities believe that Carey stole over$2 million dollars in this manner.

Investigatorsbelieve that the lenders remained unaware of the problem because Careycontinued to make monthly payments on all of the loans.  In November2005, a database search by Fannie Mae flagged the multiple mortgages onone of the properties, triggering a notification to one of thelenders.  The lender then notified the title insurance company of theproblem.  Lawyers for the title insurance company then referred thematter to the Attorney General?s Office in March 2006.   

Following an investigation by the Attorney General?s Office, aMiddlesex Grand Jury returned indictments against Carey late yesterdayafternoon.  His arraignment in Middlesex Superior Court has not yetbeen scheduled.

The case is being prosecuted byAssistant Attorney General Margaret Parks of Attorney General MarthaCoakley?s Corruption and Fraud Division, and was investigated by StatePolice assigned to the Attorney General?s Office and Investigator CarlMullen of Attorney General Martha Coakley?s Financial InvestigationsDivision.  The United States Postal Inspection Service also assisted inthe case.

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