New Jersey Man Sentenced for Fraud Concerning Over 100 Victims and Smuggling Drugs into Prison

PHILADELPHIA – U.S. Attorney William M. McSwain announced today that Daniel Sheehan, of Gloucester City, NJ, 44, was sentenced to 121 months’ imprisonment and ordered to forfeit $493,075 in criminal proceeds after pleading guilty to conspiracy, wire fraud, interstate transportation of stolen property, and smuggling narcotics into a federal prison.  Sheehan was also sentenced to a term of three years’ supervised release after his term of imprisonment.

The convictions stem from Sheehan’s operation of a scheme to obtain payments from people who sought his assistance in refinancing their home mortgages.  Instead of providing the promised assistance, Sheehan stole his clients’ money.  As a result of his illegal scheme, 110 people were defrauded, several of whom lost their homes. While being held in a federal prison awaiting trial, Sheehan arranged to smuggle narcotics into the facility for further distribution.

Between September 2012 and February 2015, Sheehan, a mortgage modification professional, represented to clients that he could help them modify their mortgages through the Home Affordable Mortgage Program (“HAMP”) or the Home Affordable Refinance Program (“HARP”).  He found clients who wished to refinance the mortgages on their residences or other properties. Sheehan assured his victims that they would qualify for a modification that would substantially reduce both the principal and interest components of the victim’s monthly payment.  Sheehan collected a fee of between $700 and $1,500 from each victim for the service of preparing and submitting the paperwork necessary to obtain the promised loan modification.

Despite collecting a fee, Sheehan often failed to submit mortgage refinance applications. In most cases, Sheehan falsely advised his clients that in order to qualify to have their mortgages refinanced, they would need to stop paying their mortgages.  These clients generally received correspondence from financial institutions demanding payment and threatening foreclosure.  Sheehan explained to his victims that these were scare tactics employed by the banks, and that if the client made any additional payments, the client would jeopardize the mortgage modification process.  He also told his clients that they should not communicate with the bank because the collections departments would not have any information about the pending modification.  As a direct result, some clients received court foreclosure complaints and told Sheehan; Sheehan assured them that he or his attorney would handle the situation.  Instead, Sheehan took no action, and some of his victims were evicted and lost their homes.

Additionally, Sheehan falsely told some clients that their modification had been approved.  The defendant often told his clients that their loan modification would not become “final” until they made “trial payments” of their new refinanced mortgage amount.  Sheehan told his victims to make these payments to Sheehan or a person designated by Sheehan.  Sheehan assured his victims that their “trial payments” would be held in escrow by Sheehan.  Although Sheehan sometimes gave his clients what purported to be escrow account statements, he converted his victims’ funds to his own personal use.

Sheehan has been detained at the Federal Detention Center (“FDC”) since April 2016. While incarcerated, the defendant arranged for a friend to illegally send him sheets of the drug Suboxone. On about August 29, 2016, a letter addressed to Sheehan arrived at the FDC purportedly from an attorney in New Jersey. The letter contained eight sheets of Suboxone, which Sheehan intended to use to pay off gambling debts that he owed to other inmates at the FDC.

“This defendant has absolutely no shame,” said U.S. Attorney McSwain. “His victims were often looking to refinance mortgages on their homes due to tragic personal circumstances, such as the death of a spouse or the loss of employment. The defendant repeatedly lied and said he would help them, but instead preyed on their vulnerability and made many of them lose their homes. He is a menace to society who has no respect for the law.”

“What Daniel Sheehan did to his victims was despicable,” said Michael T. Harpster, Special Agent in Charge of the FBI’s Philadelphia Division. “In feigning assistance with refinancing their mortgages, he gave people hope that better days were ahead. Instead, he blithely pocketed their money despite knowing foreclosure loomed. The FBI takes great pride in bringing defendants like Mr. Sheehan to justice.”   

The case was investigated by the Federal Bureau of Investigation.  It is being prosecuted by Assistant United States Attorney Paul G. Shapiro.