Dissolving company expected penalty

By PATRICK E. LITOWITZ
plitowitz@ncnewsonline.com

Castle Realty Appraisal Services Inc. is out of business but exists on paper.

Senior U.S. District Judge Gustave Diamond had to acknowledge that fact Tuesday when he sentenced the Neshannock Township firm for its role in the Affordable Housing mortgage scandal. It was ordered to pay $244,000 in restitution to First Commonwealth Bank and to serve two years of probation on its conviction of bank fraud.

The government charged the appraisal company authored inflated property assessments to First Commonwealth. The bank used the appraisals to approve a $250,000 loan in December 2005 that allowed Affordable Housing of Lawrence County to purchase seven properties.

The nonprofit agency went into default months later. Overall losses, which included $200,000 from the Lawrence County Housing Authority, amounted to approximately a half-million dollars.

“None of us are agonizing over this,” company attorney Thomas J. Farrell said yesterday.

Castle filed articles of dissolution with the state in mid-February. Decertification can take place in as early as 30 days.

“The judge is obligated to put it on probation with the condition of paying the balance of the restitution,” Farrell said.

In his review of the company’s presentence report, Diamond said full restitution was mandatory and probation was a proper penalty unless the company officially disbanded.
Farrell said that as part of Castle’s plea bargain it was ordered to pay full restitution. The amount was unknown when it pleaded guilty in October.

The company also agreed to pay $75,000 prior to sentencing.

“It was always known that the full amount would be more than $75,000,” he said. “Even back then, we realized this company was going out of business.”

The verdict will have minimal effect in the appraisal firm’s case.

Since the company does not generate income, it is unable to make payments to First Commonwealth. Farrell said Castle will not be penalized for its inability to pay.
The firm’s sentencing had been set for Tuesday. Diamond rescheduled the hearing and ordered a status conference to be held instead.

Farrell said his client was prepared to be sentenced that day.

“Let’s get this done,” Farrell said. “It’s pretty straight forward, and we all agreed on it.”

Castle Realty Appraisal Services Inc. is not affiliated with Castle Realty, an independent real estate company.

The businesses are separate entities but had operated out of the same Wilmington Road location.