Testimony wraps up in NH mortgage fraud case

CONCORD, N.H. (AP) — Jurors will hear final arguments Thursday and begin deliberating whether a Manchester, N.H. man is guilty of orchestrating an elaborate, $13 million mortgage fraud scheme or was just the owner of a failed business, as his lawyers contend.

Testimony in the trial of Michael Prieto wrapped up Wednesday after seven days. Prieto did not testify.

Defense lawyer Michael Iacopino called only one witness — Ted Perkins — who said he is friends with Prieto and worked with him at the Countrywide mortgage company, where they both were loan officers in 2005 and 2006.

Perkins testified that former loan officer John Duris, who wrote mortgages for more than two dozen of Prieto's transactions and has pleaded guilty to mail fraud, told Duris several months ago, "If the federal government and the banks say you're guilty, they you're guilty." Perkins said the conversation took place several months ago at a Manchester bar where several of his mortgage company friends were calling the charges against Prieto and Duris "a joke."

U.S. District Judge Steven McAuliffe told jurors they could use Perkins' testimony to assess the credibility of Duris' testimony against Prieto.

Prosecutors say Prieto targeted homeowners on the brink of foreclosure and persuaded them to turn over their deeds to him in exchange for staying in their homes and paying rent. He also offered them the option to buy their homes back in two years. They say he refinanced the homes using fraudulent loan applications and "straw buyers" to mask his involvement, then stripped the equity and pocketed the proceeds before defaulting on the loans.

Prosecutors called 18 witnesses and concluded their case Wednesday with the testimony of Gary Bernier, a lawyer specializing in title insurance.

Bernier said that Prieto's failure to disclose on mortgage applications the repurchase options he extended to homeowners, and that the properties were being leased amounted to fraud.

"It's kind of like having terminal cancer and not telling your life insurer about it," Bernier said.

McAuliffe granted a defense motion to dismiss one of the 10 mail fraud counts because the straw purchaser involved in that $475,000 transaction did not testify. He denied a defense motion to dismiss the money laundering count and did not rule on a motion to dismiss the remaining mail fraud counts.