“Straw Buyer” Pleads Guilty

(Updated.) On Oct. 1 2009, Alicia Martineau, a graduate of Co-op high and one-time Southern student with no criminal record, signed a made-up mortgage agreement and ​“purchased” a rundown Lloyd Street house she had no intention of living in or paying for. Then she accepted a black plastic bag filled with $10,000 in cash.

So Martineau, now 24 years old, meekly informed a federal magistrate judge in a Hartford courtroom on Monday afternoon. She pleaded guilty to one count of conspiracy to commit wire fraud and admitted to being part of a New Haven-centered real estate scam that allegedly defrauded government and private lenders of millions of dollars.

Martineau admitted to Judge Donna Martinez that she acted as a ​“straw buyer” for the group of 15 conspirators. She said she was paid to provide false information on a mortgage application, purchase a house at 211 Lloyd St., and then not make any mortgage payments. Prosecutors say conspirators falsely inflated the value of the house to get a mortgage that was larger than the cost of purchase. They then allegedly pocketed the difference and let the house fall into foreclosure.

Federal investigators claim that the group took in $10 million running this scam on 35 New Haven properties and kept rundown homes in disrepair in struggling city neighborhoods. Some of the alleged fraud involved government loans. Some of the alleged conspirators have told the Independent that they are innocent.

Martineau wasn’t the only straw buyer involved. Connecticut’s U.S. Attorney announced on Friday that another 24-year-old woman, Middletown’s Lisa Depa, pleaded guilty to the same charge as Martineau. She was the straw buyer for two homes in New Haven, at 39 Lilac St. and 433 Shelton Ave.

Their names hadn’t surfaced in government documents or court proceedings before their court appearances. They were the hidden middle-people behind a splashy case centered on bigger fish.

Other accused members of the conspiracy include some notable locals: slumlord Menachem Joseph Levitin, West Haven Police Commissioner Thomas Gallagher, former New Haven State Rep. Morris Olmer, and New Haven attorney Rabbi David Avigdor.

Several of those names were mentioned in court on Monday, as Martineau admitted her role in the scheme. Another name mentioned was that of Syed Babar, the alleged 28-year-old mastermind of the operation and the man Martineau said gave her a plastic bag of cash.

On Tuesday, the Connecticut U.S. Attorney’s officer announced that Babar pleaded guilty to fourteen counts stemming from the conspiracy: one count of conspiracy, eight counts of wire fraud, one count of mail fraud, and four counts of making false statements to the government. He’ll be sentenced on June 27.

Martineau and Depa could prove crucial to the fate of bigger fishes, like Babar. When the two women’s identities remained concealed until now, that raised speculation that the government has been leaning on them to testify against the scheme’s alleged orchestrators. The government doesn’t confirm or deny such speculation. Plea deals are often part of the package in such cases, and the pleaders’ sentences can hinge on their cooperation with authorities.

If they do eventually testify against the bigger fish in court, they may be asked to reveal how apparently unsophisticated young people got caught in such a scheme, or what would motivate them to take the legal risk of signing fake documents and walking away with bags of cash. Their remarks to the judge in their plea deals offered no such insight.

Martineau appeared in the second-floor federal courtroom just before 3 p.m. Monday. A full-figured young woman with a long brown pony tail, she wore a thin grey cardigan over a black shirt and skirt. She walked unsteadily in high-heeled black boots.

Judge Martinez took Martineau through a standard series of pre-plea questions to assure that she knew the consequences of what she was doing and that she was in sound mind to do it freely and of her own will.

Sniffling occasionally, Martineau responded to the queries in a small voice, her hands clasped at her belly.

“I had a drink after work last night,” she said earnestly, when the judge asked if she was under the influence of drugs or alcohol. In addition to the vodka and soda, she had taken some Alka-Seltzer cold medicine Sunday, she said.

The judge informed Martineau that she faces up to five years in jail followed by up to three years of supervised release and a fine of up to $250,000.

Judge Martinez asked Martineau to explain what she had done.

“Um, I agreed to purchase a property and not live in it and get paid by people for buying it,” she said. ​“I gave false information on an application for a mortgage.”

“You were a straw buyer,” Martinez said.

“Yes,” Martineau replied.

Olmer put the paperwork together and did the closing, she said.

Was the mortgage application correct? Martinez asked.

“No, ma’am. They had me inflate my income to say I was working more at a job I wasn’t working,” Martineau said. The mortgage eventually came through, she said. ​“At that point, I was given a lump sum of $10,000 and I never made any mortgage payments.”

Assistant U.S. Attorney Susan Wines summarized for the judge the evidence that the government would have shared, were the case to go to trial. The Lloyd Street house was purchased for the inflated price of $160,000, she said. Olmer did the closing, she said. Then $49,395 was transferred from Avigdor’s Citizens Bank account to the Bank of America account held by Sheda Telle Construction, a fictional company used by the conspirators, Wines said.

Babar gave Martineau $10,000 in a black plastic bag for her work, Wines said.

Martineau signed her plea agreement and officially announced that she is guilty of the charge of conspiracy to commit wire fraud.

Martineau’s lawyer, Leo Ahern, successfully argued that his client should be allowed to walk free on a bond. He said Martineau has no criminal record and has worked at Lenny’s seafood restaurant in Branford since she was 16 years old. She poses no danger to the community nor is she at risk of flight, he said.

Judge Martinez set her bond at $10,000.

Martineau is to be sentenced by Judge Alvin Thompson on April 25.