REAL ESTATE DEVELOPER AND BUSINESS ASSOCIATE CHARGED FOR ROLES IN FRAUD SCHEME

1/23/2009 U.S. Department of Justice Press Release via the FBI Website:

Nora R. Dannehy, Acting United States Attorney for the District of Connecticut, announced that a federal grand jury in New Haven has returned a 15-count Indictment charging a Connecticut real estate developer, his business associate and two of his companies with conspiracy, financial institution fraud, bank fraud, wire fraud and money laundering.

The Indictment alleges that RICHARD R. GIROUARD, 54, of Norwalk, Connecticut and Stuart, Florida, was a real estate developer and home builder in Connecticut.  GIROUARD operated GIROUARD ASSOCIATES, INC. (“GIROUARD ASSOCIATES”) and RICHARD GIROUARD ASSOCIATES, LLC (“RGA”), formerly located in New Canaan and now of Greenwich, Connecticut.  PAUL A. MAYOTTE was the Chief Financial Officer of GIROUARD ASSOCIATES and a business confidant of GIROUARD’s.

The Indictment alleges that GIROUARD and MAYOTTE, along with GIROUARD ASSOCIATES and RGA, conspired with Kevin J. O’Keefe, formerly a Vice President at Fleet Bank, now Bank of America, in Hartford and with GIROUARD’s lawyer, Paul J. Aparo, to commit financial institution bribery, bank fraud, honest services fraud, and money laundering.  The Indictment alleges that the purpose of the conspiracy was for GIROUARD and MAYOTTE and the other co-conspirators to enrich themselves through the use of O’Keefe’s position at Fleet Bank by, among other things, corrupting the process by which Fleet Bank sold distressed loan assets, including using the confidential information of Fleet Bank to submit winning bids, and to conceal the conspiracy from Fleet Bank and others.  The Indictment alleges that, in return for O’Keefe’s corrupt assistance, GIROUARD and MAYOTTE paid O’Keefe and Aparo a total of  approximately $1.4 million.

The Indictment further alleges that GIROUARD and MAYOTTE and their co-conspirators created companies in order to submit bids on Fleet Bank distressed loans and to receive proceeds from the scheme.  They also acted to exclude bidders who they believed would submit competitive bids for distressed loans on which GIROUARD and MAYOTTE and their co-conspirators sought to submit the winning bid.  They are alleged to have set up a shell company called Lexington Associates for the purpose of receiving and distributing a portion of the profits from the scheme.

The Indictment alleges that GIROUARD and his companies, GIROUARD ASSOCIATES and RGA, made approximately $6 million in profits from the scheme.

The Indictment further alleges that GIROUARD and MAYOTTE engaged in another scheme by themselves to defraud an unwitting investor in one of the corrupt transactions with Fleet Bank (and later Bank of America) out of more than $400,000, and that they conspired further to launder that money.

GIROUARD and MAYOTTE are charged with two counts of conspiracy, which carries a maximum term of imprisonment of five years, on each count; two counts of financial institution bribery, which carries a maximum term of imprisonment of 30 years, on each count; one count of bank fraud, which carries a maximum term of imprisonment of 30 years; eight counts of money laundering, which carries a maximum term of imprisonment of 10 years, on each count, and two counts of wire fraud, which carries a maximum term of imprisonment of 20 years, on each count.  Several of these counts also carry a maximum fine of $12 million.

GIROUARD ASSOCIATES and RGA, are charged with one count of conspiracy, one count of bank fraud and two counts of financial institution bribery.  Each count carries a maximum term of probation of five years and a fine of up to $12 million.

The Indictment was returned on January 21.  Today, GIROUARD appeared before United States Magistrate Judge Donna F. Martinez in Hartford and pleaded not guilty to the charges against him and his companies.  MAYOTTE will be arraigned next week.

O’Keefe and Aparo have been charged separately.  Their cases are pending before United States District Judge Alvin W. Thompson in Hartford.

This matter is being investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Eric J. Glover.