A federal grand jury yesterday indicted a Doylestown Township supervisor, his law partner, and three others on charges that they systematically bilked lenders and distressed homeowners in a $14.6 million mortgage fraud that hinged on shell corporations, forged documents, and straw purchasers.
The indictments, announced by U.S. Attorney Michael Levy and Pennsylvania Banking Secretary Steven Kaplan, allege that Doylestown Township Supervisor Jeffrey Bennett and his law partner, Stephen G. Doherty of Doylestown, preyed on homeowners facing foreclosure.
According to the 20-page indictment, Doherty contacted the distressed homeowners, claiming that he could devise a plan to keep them in their homes.
Homeowners who agreed were referred to Axxium Mortgage, which arranged for financing and straw purchasers to take title to the houses.
Authorities said that Bennett, Doherty, and other participants kept the proceeds of the sales instead of giving the cash to the homeowners.
Neither Bennett nor Doherty could be reached for comment yesterday.
Gavin Lentz, Bennett's lawyer, declined to say whether his client would be stepping down from his township position.
"We will be reviewing all of our options over the next few weeks and will make the decision that is best for all involved at the appropriate time," Lentz wrote in response to e-mailed questions yesterday.
The federal indictment charges that 35 homeowners were victims of the mortgage scheme from 2004 through 2007. It alleges that Bennett prepared fraudulent documents indicating that the sales proceeds would be paid to the homeowners.
Doherty made the referrals to Axxium, according to the indictment, and occasionally filed for bankruptcy on behalf of distressed homeowners to delay foreclosure proceedings long enough to complete the fraudulent mortgage transactions and sales.
The grand jury also indicted Edward McCusker of New Hope; his wife, Jacqueline; and John Bariana of Mullica Hill.
Doylestown Township's Web site says Bennett was elected to the Board of Supervisors in November 2007. He has served as an adjunct professor at Delaware Valley College since 2003 and on the township's Board of Auditors and Oktoberfest Committee.
In a statement, two of Bennett's colleagues on the Board of Supervisors questioned whether he should remain in office.
"We are saddened to hear about today's federal indictment," said Supervisors Barb Eisenhardt and Cynthia Philo. "The indictment creates significant doubt about Mr. Bennett's fitness to serve as a government official."
Both Bennett and Doherty are shareholders in the Doylestown-based law firm Bennett & Doherty P.C.
The firm's Web site says Doherty focuses on litigation and bankruptcy matters and has written articles on attorney ethics.