BOSTON - A tug of war is shaping up between the federal government and a mortgage company over a mansion in Hull once owned by President Kennedy's grandfather.
A federal judge in Boston last week approved the forfeiture of the mansion, known as “Honey Fitz,” to the U.S. government because its most recent owner was convicted of a mortgage fraud scheme.
U.S. District Judge Morris Lasker granted a federal prosecutor's motion to seize the property at 940 Nantasket Ave., which once was the summer home of former Boston Mayor John J. “Honey Fitz” Fitzgerald and was recently occupied by con man Jamie Edelkind.
Despite the government's stated intention to sell the property at public auction, the mortgage company that granted the most recent loan now argues that it should be given ownership or it may go belly-up.
Fairmont Funding Ltd. of New York City said it sold the $3.3 million mortgage to a division of Lehman Brothers, which now is demanding that Fairmont buy it back.
Fairmont said its cash position and capital reserves could be so depleted that it will be unable to secure lines of credit to continuously fund mortgages.
In a blistering filing, Fairmont attorney H. Elliott Wales said Edelkind has a “special talent developed over the years for stealing from banks” and poses a “real menace to the mortgage markets and to the financial markets.”
Wales said Edelkind, who awaits sentencing scheduled for June 20, should be given the maximum sentence of 30 years in prison on each of the four mortgage fraud counts.
“We have heard nothing good at the trial about Edelkind - not even from the defense,” Wales wrote. “Apparently his entire life has been spent securing other people's money without concern to repayment - ripping off banks, milking property, abusing innocent creditors.”
Fairmont argues that the government is not entitled to the proceeds of the forfeited property because no government money was lost as a result of Edelkind's misconduct. It asked the judge to hold the property in escrow until the dispute between Fairmont and Lehman Brothers is resolved.
Edelkind was arrested last year for nonpayment of child support from a previous marriage, and was convicted in a federal court in Georgia of a similar mortgage scheme. A judge sentenced him to a year in prison and ordered him to pay $221,000 in restitution to Old Republic Title Co.
He then was extradited to Massachusetts to face prosecution on the Hull mansion scheme. Edelkind was convicted in March after a six-day jury trial.
Prosecutors said he used a series of forged documents and applications to buy the house in 2000 for $900,000 under his wife's name. He repeatedly refinanced the mortgage for ever-increasing amounts, using the proceeds to pay off the new mortgage. He created a sham company, Apostille, and forged payroll documents to indicate that his wife was making up to $200,000 a year there. The company had no substantial revenues and Linda Edelkind was a full-time homemaker.
Fairmont Funding granted a $3.3 million mortgage refinancing to Edelkind's wife last summer. The mortgage included cash-out proceeds of $580,000, most of which Edelkind wired to his wife in Norway after she and their children left the country.
The government had asked for the forfeiture before Edelkind's sentencing because of concerns about the condition of the property. Technicians from KeySpan in March discovered an illegal and potentially explosive gas line had been connected to the house. Four small gas leaks were discovered that could have blown the mansion sky-high, authorities said.
Steve Adams may be reached at sadams@ledger.com.
Copyright© 2005 The Patriot Ledger
Transmitted Wednesday, June 08, 2005