Two Patchogue residents and one Florida resident were convicted on April 20 by a federal jury of bank fraud and conspiracy to commit money laundering as part of a mortgage fraud scheme announced Pamela Marsh, a US Attorney for the Northern District of Florida.
Scott Smith, 48, and Paula Smith, 43, were the two Patchogue residents convicted along with Johnathon "David" Sanders, 50, of Santa Rosa Beach, FL.
According to the Department of Justice, Scott and Paula Smith had Paula's brother, Louis Mazzella, 41 of Holbrook, purchase homes in Scott and Paula's names. Mortgage loans valued at $1.3 million and $1 million were fraudulently obtained for the purchase of the properties.
Sanders involvement revolves around selling a property to the Smiths at $1.862 million, but instead of putting the money toward a $35,000 debt, the money was diverted to other entities. The DOJ said that a series of transactions following this allowed for the Smiths to make $86,657 in six months, and Sanders received $100,000 while not paying off his mortgage.
Scott Smith's convictions consisted of conspiracy to commit bank and mail fraud, bank fraud, mail fraud and conspiracy to commit money laundering. Paula Smith was convicted with conspiracy to commit bank and mail fraud, and conspiracy to commit money laundering. Sanders was convicted with bank fraud and conspiracy to commit money laundering.
Mazella pled guilty to his charges and is scheduled for sentencing on June 12.
Sentencing for the Smiths and Sanders is scheduled for July 10.