CONCORD, N.H. — Lawyers for Michael Prieto, who is charged with bilking financially distressed homeowners and lenders out of $13 million, say his mortgage rescue company amounted to a “failed business model” not a criminal enterprise.
“My client was a bad businessman,” defense attorney Jaye Rancourt told jurors in her opening statement Tuesday in federal court in Concord. “Being a bad businessman is not a crime.”
Prosecutors say Prieto persuaded people who were having difficulty making their mortgage payments to turn their homes over to him, continue living in the homes and pay rent with the prospect of buying back the homes in two years.
Assistant U.S. Attorney Michael Gunnison told jurors Prieto paid others to buy the homes to mask his role as both the seller and buyer.
Gunnison said Prieto then remortgaged the homes — sometimes at interest rates as high as 14 percent — then defaulted on the loans.
“Mr. Prieto was the boss, the controller of all the money and the arranger of all the fraudulent transactions,” Gunnison told jurors. He said Prieto left lenders, homeowners and the “straw” buyers he paid to purchase the homes “holding the bag.”
“You will hear testimony from the straws who were the pawns in the scheme,” Gunnison said. He said Pietro paid the straw buyers $5,000 per transaction and falsely assured them they would bear no responsibility for the mortgage payments.
Gunnison said Prieto, a former loan officer for Countrywide mortgage company, defrauded his employer by using Countrywide to underwrite the first three of dozens of transactions Prieto orchestrated between 2005 and 2008.
Rancourt told jurors that the distressed homeowners are looking for a scapegoat.
“When people get hurt and their homes go to foreclosure they want someone to pay, someone to blame,” Rancourt said.
She said homeowners were told upfront that their homes would be remortgaged and that those loans were not fraudulent.