Fifth plea arrangement reached in mortgage scam case
A fifth person has entered into a plea deal with federal prosecutors over a $4.2 million mortgage scheme that involved the Cape Coral police chief’s son.
James J. O’Brien has agreed to plead guilty to one count of loan and credit application fraud, according to a plea agreement filed Tuesday with the U.S. District Court, Middle District of Florida. The charge carries a maximum sentence of 30 years in prison and a fine of up to $1 million.
“He has signed a plea agreement and it was filed in court,” said Steve Cole, public affairs specialist for the U.S. District Court, Middle District of Florida. “However, he has not appeared in court to formally plead guilty.”
O’Brien is scheduled to appear in court at 1:30 p.m. Tuesday.
O’Brien was a sergeant with the Cape Coral Police Department before he voluntarily resigned effective Monday, said the CCPD’s spokeswoman Connie Barron. O’Brien had been on administrative duty pending the outcome of the federal investigation. He had submitted the memo for leaving on April 20.
According to Barron, O’Brien was hired Aug. 19, 1999. His annual salary was $71,448 and he is eligible for a deferred retirement for having more than 10 years of service. O’Brien cannot draw a pension until he reaches age 50 and is not eligible to receive other post employment benefits once he does so.
Barron added that there is specific language where one could forfeit their pension based on the conviction of certain crimes. Officials are uncertain as to whether the charge to which O’Brien will plead guilty falls into that category. The crimes mostly have to be related to one’s job or position as a police officer.
“We are going to check with our pension attorney for clarification,” she said. “But suffice it to say that a felony conviction, in and of itself, would not terminate one’s right to a pension.”
According to the plea agreement, O’Brien agreed to participate in a “cash-out” mortgage fraud conspiracy in the Cape with a group of individuals that included Stephen Petrovich, 35, a former detective from the CCPD and the son of Police Chief Rob Petrovich. He would use his “cash-out” to cover the mortgages on two homes he owned but was having trouble paying monthly.
According to court documents, the mortgage fraud scheme took place from 2007-08 and involved eight properties in the Cape. The defendants reported “inflated sales prices to lenders and falsified applications for loans based on the higher prices, then pocketed the excess loan proceeds at closing.”
O’Brien agreed to purchase a home at 5225 Stratford Court for an inflated price then submitted a fraudulent loan application to qualify, the plea agreement states. He walked away from the deal with about $95,000, which he used to refinance his primary home, to pay loans and bills and to buy a car.
The information O’Brien provided to the lender to refinance his primary home did not include the Stratford Court home, according to the plea agreement. He made three payments on the Stratford Court home before walking away. The home went into foreclosure, and O’Brien filed for bankruptcy soon after.
Attorney Peter D. Aiken, of Fort Myers, is representing O’Brien. Aiken did not return a telephone message Wednesday afternoon seeking comment.
Petrovich and four others entered into plea deals on March 3 with federal prosecutors in connection to the scheme. They have since pleaded guilty to one count of conspiracy to commit bank fraud and wire fraud and one count of money laundering. The charges carry a maximum sentence of 30 years and fines up to $500,000.
Petrovich and Steven Reese, 32, both of Cape Coral, have sentencing dates set for June 21. Cape resident Ryan O’Brien, 34, is set for June 28 and Tyler Forrey, 28, of Cape Coral, is scheduled for July 6. Troy Bossert, 32, of San Antonio, Texas, has a sentencing set for July 19.