Needham Attorney Admits To Running Ponzi Scheme

A Needham man pled guilty on Wednesday, May 16 in U.S. District Court in Providence, RI to three counts of wire fraud and one count of money laundering related to his work as a mortgage attorney in Rhode Island and Massachusetts.

David L. Spector, 52, of Needham, admitted in court that he had operated a Ponzi scheme, defrauding mortgage holders and lending institutions of more than $600,000, according to a press release issued by the office of U.S. Attorney Peter F. Neronha.

“Spector admitted to the court that between April and October 2007 he conducted real estate mortgage refinance closings for properties in Plymouth and Lawrence, MA and Westerly, RI. As part of the closing process, Spector had the proceeds of the mortgages obtained by his clients transferred to his attorney escrow account for the purpose of redistributing the funds to pay off existing mortgages and other costs associated with the closings,” Neronha said in the press release.

“Spector admitted that rather than properly distribute the funds, he used $601,962 to run a Ponzi scheme to pay his personal expenses and to pay off previous mortgages that he had failed to pay off,” Neronha contined.

To keep people from learning about the scheme, Spector said he filed change of address forms with the mortgage companies that had not been paid off so the bills would go to a post office box he controlled.

Spector’s arrest is the result of an investigation by the Rhode Island State Police, Federal Bureau of Investigation and Internal Revenue Service, Criminal Investigation. Assistant U.S. Attorney Luis M. Matos is prosecuting the case.

Spector is scheduled to be sentenced on Aug. 8. He faces up to 70 years in federal prison followed by up to three years of supervised release, and a fine of up to $1,000,000, according to the press release.