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Fifth man pleads guilty in mortgage fraud case

By Staff | May 11, 2010

A fifth man has pleaded guilty to a charge connected to a $4.2 million mortgage fraud conspiracy involving the Cape Coral police chief’s son.
James J. O’Brien pleaded guilty Monday to one count of loan and credit application fraud, which carries a maximum sentence of 30 years in prison and a fine of up to $1 million. He entered into a plea deal May 4 with federal prosecutors. No sentencing date had been set as of Tuesday afternoon.
O’Brien is being represented by attorney Peter D. Aiken of Fort Myers. He did not return a telephone message seeking comment Tuesday afternoon.
According to his 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. O’Brien was a sergeant at the CCPD until he submitted his voluntarily resignation effective May 3.
The mortgage fraud scheme took place from 2007-08 and involved eight properties in the Cape, according to court documents. The group reported “inflated sales prices to lenders and falsified applications for loans based on the higher prices, then pocketed the excess loan proceeds at closing.”
The plea deal states that O’Brien agreed to buy a home for an inflated sales price, then submitted a fraudulent loan application in order to qualify. O’Brien made three payments on the home before walking away. The home went into foreclosure.
O’Brien reportedly walked away from the deal with about $95,000, which he used to refinance his primary home, to pay bills and loans, and to buy a car.
Petrovich and four others entered into plea deals on March 3 with federal prosecutors in connection to the scheme. Each has 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 in prison and fines up to $500,000, according to court documents.
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 sentencing June 28 and Tyler Forrey, 28, of Cape Coral, is scheduled for July 6. Troy Bossert, 32, of San Antonio, Texas, has his sentencing court date scheduled for July 19.
Prior to submitting his resignation, O’Brien had been on administrative duty pending the outcome of the federal investigation, according to officials with the CCPD. He was hired Aug. 19, 1999, and his annual salary was $71,448.