Source: US FBI
PROVIDENCE – A Johnston-based real estate investment firm, the company’s owner, and an employee of the real estate investment firm were sentenced in U.S. District Court today for conspiring to defraud and for defrauding homeowners, many of whom spoke little or no English, and financial institutions, criminal conduct that caused some homeowners to move out of their property, announced Acting United States Attorney Sara Miron Bloom.
In April 2023, after a three week trial, a jury convicted Gregory F. Aloisio, 63, of Johnston, his real estate investment company, Aloisio Group, LLC, and Aloisio Group employee John DiFruscio, Jr., 72, of North Providence, for their roles in a scheme to fraudulently obtain properties from financially distressed homeowners; to fraudulently obtain fees, commissions, and other income associated with the rental, use and short sale of homeowners’ properties; to fraudulently purchase properties in short sales and illegally “flip” them for significant personal gain; and defraud several financial institutions.
Aloisio Group, LLC and DiFruscio, Jr., were each convicted of conspiracy to commit bank and wire fraud; Gregory Aloisio and John DiFruscio were each convicted on three counts of bank fraud and one count of wire fraud; and Gregory Aloisio was also convicted on a charge of money laundering.
U.S. District Court Judge Mary S. McElroy today sentenced Gregory Aloisio to a term of incarceration of 12 months and one day to be followed by three years of supervised release and John DiFruscio, Jr. to three years supervised release, the first three months in home confinement. District Court Judge McElroy imposed a term of one year of probation against the Aloisio Group. Restitution orders in this matter will be entered by the court within 30 days.
The government presented evidence during the trial that, as part of the conspiracy and to further their scheme, the defendants lied to homeowners, financial institutions, and others, including evidence of the following:
- Through misrepresentations and concealment, the defendants represented that they were working at “arm’s length” from the homeowners, meaning that there were no relationships or connections between themselves and the homeowners that could create incentive for suppressions of house purchase prices. In fact, the defendants were controlling both sides of the purchase transactions.
- The defendants filed affidavits and documents that falsely represented 1) that no commercial relationship existed between the parties to induce lenders to approve short sales; 2) that there was no agreement to “flip” or rent the targeted properties after the short sale; and 3) the identity of the seller, the identity of the buyer, and/or cash to the parties at closing.
- In fact, defendants lined-up buyers prior to short sale so as to guarantee a flip and profit after the short sale. Prior to short sale, the defendants entered into agreements with lined-up buyers to sell properties at prices more than the short sale prices.
- The defendants deceived homeowners into believing that they offered a legitimate solution to the homeowners’ financial distress. In reality, the defendants were using homeowners to perpetuate their fraud. Some financially distressed homeowners were convinced to move out of their residences and lost their homes. Others remained in their properties and paid rent to the co-conspirators.
The case was prosecuted by Assistant United States Attorneys Sandra R. Hebert and Milind M. Shah. The matter was investigated by U.S. Department of Housing and Urban Development – Office of Inspector General and the FBI.
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