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A Connecticut real estate agent was sentenced in federal court in Boston for his role a multi-year scheme to defraud his clients by engaging in fraudulent short sales of government and bank-owned properties to straw buyers acting at the direction of the defendant.

James Macchio was sentenced to 42 months in prison and two years of supervised release. He was also ordered to forfeit $621,579 and to pay at least $2,567,154 in restitution.

According to the charges brought against him, Macchio and another real estate agent, Sheldon Haag, used straw buyers to acquire properties owned by the clients of Macchio’s brokerage, which included banks, federal agencies, bankruptcy trustees and other mortgage holders. The straw buyers included a shell company set up by a co-conspirator as a purported construction company.

Macchio and his co-conspirators hid their involvement as the de facto buyers of short sale properties from their clients, the owners of the properties, and used their inside knowledge as the owner’s broker to minimize sale prices to maximize their gain from later “flipping” the properties. The collaborators further defrauded clients by submitting fraudulent renovation bids from contractors to their own clients, including from a fake construction company they controlled through a co-conspirator. Once their clients accepted a fraudulent bid, Macchio and his comrades hired different contractors at much lower cost and pocketed the difference between the fraudulent bid and the actual cost of the property repairs.

When the Covid-19 pandemic began, Macchio and co-conspirators defrauded the Small Business Administration by obtaining pandemic relief loans to fund their ongoing real estate fraud scheme.

Macchio pleaded guilty in May to one count of conspiracy to commit wire fraud. Haag previously pleaded guilty to his role in the conspiracy and was sentenced in October to one year and one day in prison to be followed by supervised release.