EagleTribune.com, North Andover, MA

November 4, 2011

Feds say attorney obtained more than $400,000 illegally

By Mark E. Vogler
mvogler@eagletribune.com

NORTH ANDOVER — Attorney Daniel S. Braese, who once aspired to be a town selectman, misappropriated more than $400,000 that was supposed to pay off mortgage payments in real estate closings he handled, federal prosecutors allege in court documents filed this week.

Braese, 47, of 21 Periwinkle Way, faces two counts of bank fraud and one count of making a false statement in a Federal Housing Administration transaction — charges stemming from an investigation by several agencies into his alleged mortgage loan fraud. U.S. Attorney Carmen M. Ortiz's office filed the charges against Braese Wednesday in Federal District Court in Boston.

If convicted, Braese could receive up to 30 years in prison on the bank fraud charge; another two years for filing phony documents with the FHA. He faces more than $1 million in possible fines.

Assistant U.S. Attorney Paul G. Levenson also indicated that the federal government will initiate forfeiture proceedings against Braese upon conviction for any of the charges for at least $429,738.69 — "which represents the proceeds of the offenses," according to court papers.

If federal officials can't locate the money that Braese allegedly diverted from two real estate closings, they will seek forfeiture of his property up to the value of the money he misappropriated, the document said.

Braese could not be reached for comment yesterday. His lawyer, Salem attorney Jeanne M. Kempthorne did not return several telephone messages left by reporters at The Eagle-Tribune.

Braese, who has been a member of the town's Zoning Board of Appeals for seven years, quit his appointed position in the wake of the federal charges filed against him.

"I am resigning for personal reasons," Braese wrote in a letter dated Wednesday to Interim Town Manager James Purcell.

There was no immediate reaction from town officials. Selectman Rosemary Smedile declined comment after confirming selectmen had received an emailed copy of the resignation letter from Braese, whose name had been deleted from the list of board members posted on the town website.

Braese, who has been licensed to practice law in Massachusetts since December 1992, is a Woburn real estate attorney. He runs Daniel S. Braese & Associates, a law office that handles real estate and mortgage closings for banks and mortgage lenders.

The charges against Braese relate to his handling of closings on two homes — one last December in Saugus, the other in late January in Norwood. The U.S. Attorney's Office alleges:

In the case of the Saugus home, Florida Capital Bank Mortgage wire-transferred $191,410.62 into one of Braese's escrow accounts for the purpose of completing the purchase transaction. The lender instructed Braese to pay off a lien from a previous mortgage of $82,981.32 to the Bank of America of Charlotte, N.C. At the closing, Braese signed a HUD settlement statement which reported the mortgage payoff to Bank of America.

But instead of paying off the Bank of America mortgage, "Braese diverted a portion of the monies he received for the closing and used them for other purposes," the U.S. Attorney's Office alleged. Braese also "attempted to conceal his diversion of loan proceeds." On three occasions between December 2010 and this March, he wrote checks from one of his law office bank accounts to forestall default and foreclosure on the undischarged Bank of America mortgage.

Allegations say in the case of the Norwood home, MSA Mortgage, LLC of Winthrop wire-transfered $351,919.36 into one of Braese's escrow accounts and instructed him to pay off liens from previous loans to PHH Mortgage of Mount Laurel, N.J. ($319,246.76) and J.P. Morgan Chase of New York City ($40,531.01).

At the closing, Braese signed a HUD settlement statement reporting those mortgage payoffs.

But, Braese instead "diverted the monies he received for the closings and used them for other purposes, including paying off mortgage liens on other properties," according to the court documents.

Reporter Alex Bloom contributed to this story.