What Happened Here Didn’t Stay Here

Thomas MacMillan Photo After dinner at Goodfellas, a police commissioner slipped into a car and was handed an envelope with thousands of dollars in cash by the alleged mastermind of a mortgage fraud scheme.

Little did they know, their dining companion who watched from the back seat would not stay quiet.

The back-seat passenger, Kenneth Perkins, recounted that alleged transaction Thursday in federal court in Hartford. It was day two of a jury trial for six members of an alleged mortgage fraud ring before Chief Judge Alvin W. Thompson.

Perkins, a 28-year-old Groton man, is an admitted co-conspirator in a scheme that allegedly cheated private lenders and the U.S. government out of millions of dollars and left a trail of blight across New Haven’s Fair Haven, Dixwell and Newhallville neighborhoods, as well as other towns.

After the feds caught up to him, Perkins agreed to wear a wire and help the feds take down 14 other people in the scheme.

Government prosecutors say a group of 15 conspirators falsely inflated the cost of homes, took out government-backed mortgages with trumped-up loan applications, bought the homes for their actual prices, pocketed the difference, and let the homes fall into foreclosure. The conspirators allegedly pulled the scheme on numerous homes in New Haven and surrounding towns, defrauding lenders of over $3.2 million.

Several members of the ring, including alleged mastermind Syed Babar, have already pleaded guilty to their roles in the operation.

Six who claim their innocence are currently on trial, all packed in the same courtroom.

They include New Haven rabbi and attorney David Avigdor, former New Haven Alderman and state Rep. Morris Olmer, New Haven landlord Marshall Asmar, West Haven police commissioner and former appraiser Thomas Gallagher, Florida real estate developer Wendy Werner, and Rab Nawaz, uncle of the alleged mastermind.

Melissa Bailey Photo Perkins (pictured), the government’s star witness, took the stand all day Thursday, and is expected to do so Friday and Monday as well. He dressed warmly for the occasion, a purple dress shirt and tie peeking out from a gray sweater under a black suit. He leaned forward and blinked frequently under questioning by Assistant U.S. Attorney Eric Glover. A panel of jurors, about half of whom were wearing green for St. Patrick’s Day, watched him closely and squinted at documents on four courtroom monitors.

Now 28 years old, Perkins lives with his parents in Groton and works for a discount wine store. He said he first met Babar in 2002 at Three Rivers Community College in Norwich, where they were in the same computer networking class. Four years later, Babar rolled up in a BMW and made a pitch on a mortgage fraud scheme, he said. Perkins signed up. From from 2007 to 2008, when they were both 24 years old, Perkins bought eight homes through Babar’s ring. After his credit went south, he transitioned to forging fake pay stubs and invoices to support the operation, he testified in court.

Perkins started cooperating with the feds on Jan. 12, 2010, when FBI agents paid him a visit at his Groton home.

Through direct testimony, leaked emails and a recorded conversation, Perkins Thursday shared the behind-the-scenes machinations of the operation he was involved with for over three years.

In doing so, Perkins admitted to past lies, including forging documents and lying on loan applications despite warnings that it is a crime to do so. Those lies will open him up to tough questions from the six teams of defense lawyers, who are due to cross-examine him Monday morning. 

But for Thursday, he and the prosecution controlled the narrative. It was a spicy one.

Goodfellas

In hours of questioning, Perkins painted one character as most important among the six defendants: Gallagher, a former appraiser who continues to serve on West Haven’s police commission.

Melissa Bailey Photo Perkins recounted meeting Gallagher (pictured) for the first time at Café Goodfellas, a mob-themed Italian restaurant on New Haven’s State Street, sometime in 2007.

Perkins said he had dinner with Gallagher and Babar, the alleged mastermind. They talked about Tuscany and limoncello. The purpose of the meeting wasn’t the eggplant rollatini or the fiore di latte, but the transaction after the meal, according to Perkins.

“The main thing was paying Tom afterward,” he said.

After dinner, the three got into a car on Bradley Street, next to Goodfellas, he testified. Perkins sat in the back seat. Babar and Gallagher sat up front. Perkins allegedly watched Babar hand Gallagher cash in an envelope. Then Gallagher got into his car, which was parked in front of that car, and drove away.

Perkins didn’t say how much cash was in the envelope. He said Gallagher routinely got paid thousands of dollars in cash, delivered in envelopes or bags, for vastly inflating appraisals on homes that the schemesters wanted to buy.

Gallagher would allegedly use doctored photos to produce fraudulent appraisals for rundown properties, claiming they had been rehabilitated. In return for the lie, Gallagher received $5,000 to $10,000 for each appraisal, according to Perkins. His usual appraisal fee was $375, according to the prosecution.

How did Perkins know how much Gallagher got paid? He was personally involved in the payments, he testified. He said he would drive Babar to Gallagher’s West Haven appraiser’s office to make the deliveries. Babar would count the money in the passenger side of the car. One time, Perkins made the hand-off himself.

“I had about ten thousand dollars in an envelope,” Perkins said. “I brought the money in.”

Gallagher “said thank you,” Perkins recalled on the witness stand. “Then we went on talking about laptops.”

Caught On Tape

Gallagher was “the first person to get paid” on the deals, according to Perkins.

Babar told Perkins Gallagher was the “most important” person in the scheme, and he was risking his appraiser’s license to help them.

In a recorded conversation played in court, Babar detailed how the scheme worked.

The discussion took place on Jan. 14, 2010, two days after FBI agents recruited Perkins to their side. Perkins wore a wire to a meeting with Babar at Babar’s New London house.

At the time, Babar and Perkins were planning for a straw purchase at 221 Starr St. in New Haven. The property was owned by New Haven landlord Marshall Asmar. Gallagher was to serve as appraiser. Olmer would handle the transaction, Perkins said.

In the recorded conversation, Babar discusses how to divvy up the profit from the straw purchase. He proposes buying the home for $125,000, and applying for a loan in that amount based on fake documents. Asmar, the seller, would get paid $70,000, even though the listed purchase price was $125,000.

The straw buyer would get $15,000 for the deal, Babar says.

Baber says Gallagher would get $8,000, and that he “usually” gets between $5,000 and $10,000, depending on the size of the home and the sale price. Olmer would get an undisclosed amount of money, and Babar and Perkins would each take $5,000.

The deal never went through, Perkins testified.

Gallagher lost his real estate appraisal license a month later, on Feb. 9, 2010, according to state records. He continues to hold a broker’s license.

Gallagher served as the appraiser on seven of the eight homes Perkins bought. The homes were vastly overvalued given their deteriorated state, Perkins testified.

For example, he bought a house at 17 Denison Ave. in New London for $260,000, sign unseen, on April 11, 2007. The sale price, negotiated by Babar, was based on an appraisal from Gallagher in exactly that amount. The appraisal stated the house had been rehabilitated.

Perkins said when he saw the house after he bought it, he found cockroaches, water damage, cobwebs and a missing toilet.

“Nothing had been rehabbed,” Perkins testified.

“We Owe It To Tom”

Gallagher produced appraisals for three of Perkins’ sham purchases before Perkins returned the favor in April 2007, when Gallagher ran into some trouble himself. Gallagher was in over his head on a vacation home he had bought in Naples, Florida with his second wife.

“Tom needed to get out” from owning the house, Perkins recalled Babar telling him.

“We owe it to Tom to buy this house,” Babar told Perkins, according to Perkins’ testimony.

Perkins bought the house, sight unseen, for $578,000—far more than he could afford. To convince a lender to give him a $462,000 loan, Perkins lied on the application, he admitted. He failed to list three other homes he had bought, and he used a forged document attesting that he worked from home, so he could use the house as a primary residence, even though it was a full day’s drive from his job in Connecticut.

Perkins bought the house on April 30, 2007. When he later visited the site, he found it was in good condition, with a pool and a spa in the back. But it was empty of furniture. Perkins furnished it and tried to rent it out, but failed to do so and ended up defaulting.

Perkins said he didn’t get paid for buying the house. “This was not-a-profit house.” It was a favor to Gallagher, because he was “important to our deals.”

In addition to the Florida vacation home, Perkins bought seven houses in Connecticut, all with Gallagher serving as the appraiser. He said he tried to fix them up and rent them out, but could never keep up with the steep loan payments. He defaulted on all eight houses, causing his credit to crash and burn.

Then he switched to forging documents, producing pay stubs for fake companies to inflate straw buyers’ apparent incomes. At Gallagher’s request, he doctored up photos of rundown homes so they would look nicer in the appraisals.

“Remove The Man”

One such request is recorded on an email Gallagher allegedly sent to Syed Babar. In addition to wearing a wire and recording phone conversations with several members of the alleged scheme, Perkins turned over emails from his home computer to an FBI agent.

Prosecutor Glover produced one such email, allegedly sent from Gallagher to Babar on Sept. 24, 2009. In it, Gallagher sends a photo of 211 Lloyd St. in New Haven. The door and windows are boarded up, the siding is peeling, and there’s a man hanging out on the porch.

“We need the man to be removed, and can the background be cleaned up some?” Gallagher asks. Perkins said at Babar’s request, he used Adobe Photoshop to add new windows and a door to the photo, and to get rid of the man. That photo was later used in Gallagher’s appraisal, according to Glover.

The email was submitted to court as one of a thousand-plus pieces of evidence in the case.

Gallagher’s lawyer, Alex Hernandez, objected to the evidence. He got a brief chance to question Perkins on the reliability of the email.

Perkins testified that under the supervision of an FBI agent in his Groton home, he copied and pasted the emails from Babar’s email onto documents, then put them on a CD for the feds. He said Babar gave him free access to his email account at that time.

Hernandez asked Perkins if he had permission to turn the emails over to the FBI. It’s a federal crime to share other people’s emails without permission, he charged. Did Babar give him permission to do so?

Perkins replied that Babar gave him free access to the account.

Babar “never said do not submit it to the FBI,” Perkins reasoned.

The exchange gave a taste of what’s to come Monday, when lawyers for the six defendants are expected to take turns attacking Perkins’ credibility.


Previous coverage of this case:

Fraud Trial Opens With Oz-Like Yarn
“Partying” MySpacer Lined Up Scam Homebuyers
“Straw Buyer” Pleads Guilty
Neighbors, Taxpayers Left With The Tab
FBI Arrests Police Commissioner, Slumlord, Rabbi
One Last Gambit Falls Short
Was He In “Custody”?
Is Slum Landlord Helping The FBI?
Feds Snag Poverty Landlord

 

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Comments

posted by: Jonathan Hopkins on March 18, 2011  12:10pm

Clowns.

posted by: Kevin on March 18, 2011  12:48pm

Small fish in a big pond, considering there are billionaires playing games like this across international borders, hiding their true wealth from taxation with sneaky but legal loopholes, bringing down banks and collapsing economies and getting bailed out by the workers whose jobs they sent abroad, all while using the resulting chaos and their vast funds to help elect political leaders who blame it all on unions, the poor and teachers.

So am I surprised that a police commisioner from West Haven, my town, aspires to such lofty goals?  Not in the least.

posted by: Anti-Masonic Party on March 18, 2011  2:22pm

I’d like to know what the ribbon and ring stand for. I would say that Gallagher (and many others like him) have a stake in keeping key areas of West Haven and New haven poor and downtrodden. Someone tell me if the lapel ribbon is just a “3 leaf clover” and the ring is just a “class ring”.
The people have allegiances well beyond what we the people know about.

posted by: Anti-Masonic Party on March 18, 2011  9:51pm

Even if it WAS Saint Patrick’s Day when the pic was taken…  I am SURE that there are other forces at work when it comes to the planned impoverishment of downtown West Haven and parts of New Haven. The story proves it, actually.

posted by: Ellis Copeland on March 19, 2011  12:34am

Corruption in CT!?!?!? Shocked, shocked I tell you.

posted by: Toni on March 19, 2011  6:20am

Che schifo!!!  That’s Italian for “how disgusting”

posted by: Lifer on March 19, 2011  6:44am

That Perkins guy got played.

posted by: Joe on March 19, 2011  4:09pm

Wonderfully told, Melissa. I can’t wait to read about Monday’s proceedings.

posted by: natalie on March 21, 2011  8:11am

Here I am struggling struggling to make my mortgage payments after a staff wide 20% year-long salary deduction.  These guys need to be put away for a long, long time.

The fact that they focused on Fair Haven, New Hallville and mostly impoverished communities reminds me of the line in the Godfather when they were discussing the sale of heroin—“sell in to the ni**ers.”  (I guess that is how you write it in a politically correct society, although I think it is stupid.  No one ever called me “n-word” to my face, but they have called me ni**er.  But I do digress.

This was a good read.  I find it appropriate that it started out at Goodfellas.

posted by: THREEFIFTHS on March 21, 2011  9:11pm

posted by: natalie on March 21, 2011 9:11am

Here I am struggling struggling to make my mortgage payments after a staff wide 20% year-long salary deduction.  These guys need to be put away for a long, long time.


They still will live the Life.


http://www.youtube.com/watch?v=MQhBfRDd6GM

posted by: Bill Saunders on March 21, 2011  11:49pm

Natalie,

Starting out with ‘Goodfellas’ with a slick, sensational lead line.

If I was the innocent business owner though, I might have serious misgivings about the special attention, and the implications.