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James Macchio, 46, Sentenced to 42 Months in Prison for Defrauding Clients in Short Sale Scheme
BOSTON – In a brazen case of real estate fraud, James Macchio, 46, of Glastonbury, Conn., was sentenced to 42 months in prison and two years of supervised release for his role in a multi-year scheme to defraud his clients by engaging in fraudulent short sales of government and bank-owned properties to straw buyers acting at the direction of Macchio.
According to court documents, Macchio used straw buyers to acquire properties owned by the clients of his brokerage, including banks, federal agencies, bankruptcy trustees, and other mortgage holders. The straw buyers included a shell company set up by a co-conspirator as a purported construction company. Macchio and his co-conspirators hid their involvement as the de facto buyers of short sale properties from their clients, the owners of the properties, and used their inside knowledge as the owner’s broker to minimize sale prices in order to maximize their gain from later “flipping” the properties.
While perpetrating the “flipping scheme,” Macchio and his co-conspirators further defrauded clients by submitting fraudulent renovation bids from contractors to their own clients, including from a fake construction company they controlled through a co-conspirator. Once their clients accepted a fraudulent bid, Macchio and his co-conspirators hired different contractors at much lower cost and pocketed the difference between the fraudulent bid and the actual cost of the property repairs.
During the COVID-19 pandemic, Macchio and co-conspirators defrauded the Small Business Administration by obtaining pandemic relief loans to fund their ongoing real estate fraud scheme. Sheldon Haag, another real estate agent and co-conspirator of Macchio, was previously sentenced to one year and one day in prison for his role in the conspiracy.
The scheme, which involved millions of dollars in fraudulent transactions, was carried out over several years, with Macchio and his co-conspirators using their positions as real estate agents to manipulate the short sale process and line their pockets with ill-gotten gains.
Macchio was ordered to forfeit $621,579 and to pay at least $2,567,154 in restitution. Assistant U.S. Attorney Kriss Basil, Deputy Chief of the Securities, Financial & Cyber Fraud Unit, prosecuted the case.
The investigation was led by the Federal Bureau of Investigation, Boston Division, with valuable assistance from the United States Department of Housing and Urban Development and the U.S. Department of Veterans Affairs, Office of Inspector General, Northeast Field Office. Jodi Cohen, Special Agent in Charge of the Federal Bureau of Investigation, Boston Division, Jonathan Wlodyka, Acting Special Agent in Charge of the Internal Revenue Service Criminal Investigation, Boston Field Office, and Christopher Algieri, Special Agent in Charge of the U.S. Department of Veterans Affairs, Office of Inspector General, Northeast Field Office, made the announcement today.
Macchio’s scheme was a brazen example of the lengths to which some individuals will go to commit financial crimes. Fortunately, his actions have been brought to justice, and his victims will receive some measure of reparation.
Key Facts
- State: Massachusetts
- Category: Fraud & Financial Crimes
- Source: DOJ Press Release â†â€â€
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