Neshannock firm closes after paying restitution

By PATRICK E. LITOWITZ
plitowitz@ncnewsonline.com
 
A Neshannock Township firm ceased operations after repaying a bank that had been defrauded in the Affordable Housing scandal.

The U.S. Attorney’s Office pursuit of $125,000 in additional restitution hastened the end of Castle Realty Appraisal Services Inc.

The business paid $75,000 in mid-February to First Commonwealth Bank, according to federal documents. The payment was part of the agreement in which the company pleaded guilty to one felony count of bank fraud.

Government prosecutors charged that Castle Realty Appraisal Services provided fraudulent assessments to First Commonwealth. The information was used as part of Affordable Housing of Lawrence County’s $250,000 loan application for seven properties.

After the company’s plea hearing in October, its attorney Thomas J. Farrell said the judge could issue a fine, order additional compensation or impose probation when sentencing occurred. In response to the presentence report, the government said the restitution amount was understated and the correct total was $200,000.

Approximately two weeks ago, the company prepared and filed articles of dissolution with the state. Castle Realty Appraisal Services said it lacked the money to satisfy its liabilities.

Senior U.S. District Judge Gustave Diamond addressed the company’s probable fate Wednesday when he reviewed the presentence report. First Commonwealth’s total losses were pegged at $312,614, which represented principal and interest.

The bank received $60,200 from the sale of seven Affordable Housing properties. That leaves the bank out of $252,414. Diamond said full restitution was mandatory under federal sentencing guidelines.

“(It) is readily ascertainable that defendant cannot and is not likely to become able to pay the minimum of the guideline fine range,” Diamond wrote.

He noted that unless the company dissolved, probation was a suitable punishment.
The day after Diamond’s review Farrell filed paperwork advising Castle Realty Appraisal Services had gone out of business.

A company representative was scheduled to appear tomorrow morning for sentencing in federal court, downtown Pittsburgh. Diamond ordered a status conference instead and continued the sentencing hearing.