A married Longmeadow couple was arrested in connection with a commercial lender defraud scheme in which the couple was accused of providing fake rent rolls and forged lease agreements for several western Massachusetts properties.
Authorities arrested Louis “Lou” R. Masaschi, 57, and his wife, Jeannette Norman Masaschi, 56, in connection with the fraud scheme on Tuesday. The couple was indicted by a Springfield grand jury on one count of conspiracy to commit wire fraud; two counts of wire fraud; and one count of aggravated identity theft, the U.S. Attorney’s Office District of Massachusetts wrote in a statement.
According to court documents, Masaschi and Norman were partners in dozens of limited liability companies that owned commercial and residential property in Springfield, East Longmeadow, Enfield, Connecticut as well as other Western Massachusetts and Connecticut municipalities.
A limited liability company essentially is a business that takes its debts or liabilities away from its owners. The business itself becomes its own legal entity that bears all financial responsibility
The couple owned the following limited liability companies, according to officials: Longmeadow Hospitality; JLL Realty Developers, LLC; Shaker Rd, LLC; and 79 Enfield Realty, LLC.
Prosecutors accused the couple of conspiring to fraudulently obtain loans for their companies from financial institutions and commercial lenders by providing “false, fictitious and fraudulent” financial information – including false rent rolls and fraudulent lease agreements.
After receiving the loans, the couple made some or no payments and ultimately defaulted on the loans, causing substantial losses to the financial institutions and commercial lenders, prosecutors stated.
On May 11, 2018, Masaschi and Norman received a $350,000 loan for JLL Realty Developers secured by the first mortgage of a residence in Springfield. Days later, the couple changed the loan agreement and issued a $765,000 loan to the same company, according to prosecutors.
The couple went on to cross-collateralize and cross-default the first loan to secure a second mortgage on two homes in East Longmeadow, officials said.
Around June 29, 2018, Masaschi and Norman obtained an $875,000 loan for 79 Enfield Realty secured by Masaschi’s 100% interest in the company, prosecutors said. Officials believe the loan was used to pay off an outstanding loan from another financial institution, which was only 45 days from maturing.
“To obtain these loans, it is alleged that Masaschi and Norman failed to disclose that the income reportedly produced by commercial properties listed in their loan applications was based on materially false, fictitious and fraudulent rent rolls and lease agreements,” feds said. “Masaschi and [Norman] also allegedly overstating [sic] the amount of income collateral properties were paying by providing fraudulent rent rolls, forged tenant signatures and inflated lease amounts and rental terms.”
Prosecutors accused the couple of canceling payments on the JLL Realty Developers loans in January 2020. Additionally, apart from six months of interest reserves provided by the commercial lender, prosecutors said Masaschi and Norman never made any payments on the 79 Enfield Realty loan.
Masaschi and Norman were released on conditions and scheduled to next appear in court on July 24.
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