A real estate broker who lives in Glastonbury has agreed to plead guilty in a scheme to defraud big banks and others by giving them false information about short sales of real estate and renovation contracts that he and co-conspirators orchestrated for their own profit, authorities say.
Sheldon Haag, 34, has signed an agreement to plead guilty to conspiracy to commit wire fraud in U.S. District Court in Boston, according to a news release from the Massachusetts U.S. Attorney’s office and court documents. The hearing at which Haag will formally plead guilty has yet to be scheduled, the release says.
Haag’s written plea agreement estimates the loss caused by the fraud to victims that included the Ohio-based U.S. Bank at between $1.5 million and $3.5 million, although Haag reserves the right to challenge that calculation.
In the agreement, federal prosecutors pledge to seek the minimum prison term for Haag recommended by federal sentencing guidelines. The plea agreement includes a guideline calculation that would put that minimum at 97 months, just over eight years, assuming that Haag has no significant criminal record.
The agreement does not say what, if any, record he has. But online Connecticut judicial records show no conviction for him in the last 10 years, and a nationwide search of federal court records revealed no other federal criminal cases.
The sentencing guidelines are advice, and the judge who presides over the case will determine the sentence.
Haag’s sentence is likely to include court orders to pay restitution to the fraud victims and to “forfeit” ill-gotten gains to the government. If Haag lacks sufficient assets to pay both the restitution and the forfeiture, there is a procedure for turning the forfeited money over to the victims as restitution, which is described in the plea agreement.
The charging document Haag has agreed to plead guilty to says he had at least five co-conspirators in the scheme. It does not name those people, and there is no indication that any have been charged.
A short sale of real estate is a sale at a price below the outstanding balance of the mortgage. Short sales are used to avoid foreclosure proceedings on distressed properties and generally require the lender’s approval.
The charging document says Haag and his co-conspirators hid their business relationships and falsely certified that the short sales involved in the scheme were arm’s length transactions. The sales were actually to “straw buyers,” competing bids for the properties were fabricated, and the conspirators resold the properties for their own profit, authorities allege.
The scheme also involved bid rigging on renovation contracts for properties, according to the charging document. It says one of the conspirators established a limited liability company “that falsely purported to be a construction company” owned by the conspirator.
Haag would solicit work for the company on properties listed for sale by the brokerage he worked for while actually having the work done by contractors who charged less money, the charging document says. It adds that Haag and a different co-conspirator “earned additional fraudulent profits of more than $1.3 million” through this aspect of the scheme.
The charging document describes several examples of property sales to straw buyers, including properties in Stamford, East Hartford and Weston.
U.S. Bank held a $498,500 mortgage on the Stamford property, and one of the straw buyers ultimately succeeded in buying it for $430,000 in May 2016, then resell it three months later for $590,000, the document says.
