Operator of Sober Homes and Associate Arrested for Fraud Schemes Involving Sober Home Client, Mass Save Program and COVID-19 Business Loans

Summary

A press release of the U.S. Attorney's Office for the District of Massachusetts dated Tuesday, May 23, 2023, announcing that sober home operator Daniel Cleggett, 37, of Kingston and manager Nicholas Espinosa, 37, of Randolph were charged in a 37-count indictment over alleged frauds involving sober homes in the Greater Boston area, the Mass Save Program and a federal COVID-19 business loan program. It lists the charges as two counts of wire fraud conspiracy, one count of mortgage fraud conspiracy, 21 counts of wire fraud, six counts of money laundering and one count of making false statements to a mortgage lending business. It states that Cleggett was separately charged with further counts.

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Press Release

Operator of Sober Homes and Associate Arrested for Fraud Schemes Involving Sober Home Client, Mass Save Program and COVID-19 Business Loans

Tuesday, May 23, 2023

For Immediate Release

U.S. Attorney's Office, District of Massachusetts

BOSTON – An operator of numerous sober homes in Massachusetts, who also operated insulation companies receiving funds through the Mass Save Program, was indicted along with a sober home manager, for their alleged involvement in numerous fraud schemes involving sober homes in the Greater Boston area, the Mass Save Program and a federal loan program to assist businesses during the COVID-19 Pandemic.

Daniel Cleggett, 37, of Kingston and Nicholas Espinosa, 37, of Randolph, were charged in a 37-count indictment with two counts of wire fraud conspiracy; one count of conspiracy to make false statements to a mortgage lending business (mortgage fraud conspiracy); 21 counts of wire fraud; six counts of unlawful monetary transactions (money laundering); and one count of making false statements to a mortgage lending business. In addition, Cleggett was separately charged with four counts of wire fraud and two counts of making false statements to a mortgage lending business. The defendants were arrested this morning and released following an initial appearance in federal court in Boston today before U.S. District Court Magistrate Judge Paul G. Levenson.

According to the charging documents, Cleggett was the founder of the sober home business A Vision From God LLC (AVFG). Established in November 2016, AVFG owns and operates sober homes in Boston, Wakefield, Quincy and Weymouth under trade names including Brady’s Place, Lakeshore Retreat and Lambert House. Espinosa managed the day-to-day affairs of Cleggett’s sober home business.

It is alleged that Cleggett, Espinosa and a sober home client entered into a conspiracy to defraud a New York-based family trust that was paying for the client’s room and board at Brady’s Place, located in Quincy. Specifically, Cleggett and Espinosa allegedly overcharged the family trust for room and board by up to $12,500 per month by submitting false and fraudulent invoices to the family trust. Cleggett and Espinosa would allegedly then issue “refund” checks to the client in furtherance of the fraud scheme.

According to the charging documents, from approximately October 2019 to December 2021, Cleggett personally, and through straw purchasers including Espinosa, purchased the three residential properties in Weymouth and Boston to use as sober homes. It is alleged that Cleggett, Espinosa and others submitted false information and fraudulent documentation including falsely representing that the three properties were intended to be purchased as primary residences when, in reality, each was intended to be a sober homes.

In addition to the sober home business, Cleggett operated numerous insulation contracting companies that participated in the Mass Save Program: Green Save Energy Corporation; Environmental Construction Objective Inc. (ECO); Green Giants, LLC; and Insulation Situation, LLC. Mass Save is a Massachusetts public/private partnership sponsored by gas and electric utility companies that funds energy conservation projects and improvements via energy efficiency funds charged to Massachusetts residents’ utility bills. Specifically, Green Save and ECO received millions of dollars for residential insulation work from a lead vendor company under the Mass Save program. It is alleged that, from 2018 through mid-2021, Green Save and ECO fraudulently billed the vendor company for required permits that were not actually obtained. Green Save and ECO were ultimately terminated from participating in the company’s program in June 2021, and Cleggett was banned from participating in the Mass Save program. In response to this, Cleggett, Espinosa and other co-conspirators allegedly formed Insulation Situation and Green Giants to enter as new lead vendors with the same company under straw owners. As a result, Cleggett allegedly obtained a total of $954,443 in payments from the company to Green Giants and Insulation Situation, despite him being banned from participating in the Mass Save program.

Additionally, it is alleged that on April 1, 2020, Cleggett submitted three Economic Injury Disaster Loan (EIDL) applications to the Small Business Administration for AVFG, the Daniel Cleggett Sole Proprietorship and Green Save. Cleggett obtained a total of $794,900 in EIDL loans and advances. In the applications, it is alleged that Cleggett falsely denied involvement in illegal activity despite his alleged involvement in the sober home wire fraud scheme and the mortgage fraud scheme involving one of his Weymouth sober homes. It is also alleged that Cleggett’s Sole Proprietorship EIDL application was false because the Daniel Cleggett Sole Proprietorship did not exist. Despite certifying that EIDL proceeds would only be used for “working capital” for the entity seeking the loan, Cleggett allegedly used tens of thousands of dollars from the funds to pay for personal expenses including EZ-Pass bills, gym membership fees, pet expenses, airline tickets, car rentals, vacation trips to Yellowstone, Montana and Aruba, and thousands of dollars in hotel resort stays for Cleggett and his girlfriend – which included spa fees as well as a wine and caviar dinner, among other expenses. Cleggett also allegedly used Green Save EIDL funds for $37,997 in wedding expenses.

The charges of wire fraud and wire fraud conspiracy provide for a sentence of up to 20 years in prison, three years of supervised release and a fine of up to $250,000. The charge of making false statements to a mortgage lending business provides for a sentence of up to 30 years in prison, five years of supervised release and a fine of up to $1 million. The charge of unlawful monetary transactions provides for a sentence of up to 10 years in prison, three years of supervised release and a fine of up to $250,000. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and statutes which govern the determination of a sentence in a criminal case.

Acting United States Attorney Joshua S. Levy; Joseph R. Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigation, Boston Division; and Joleen D. Simpson, Special Agent in Charge of Internal Revenue Service’s Criminal Investigations in Boston made the announcement today. Valuable assistance was provided by the Kingston, Randolph and Quincy Police Departments. Assistant U.S. Attorneys and John T. Mulcahy of Levy’s Criminal Division and Dustin Chao, Chief of Levy’s Public Corruption Unit, are prosecuting the case.

The details contained in the charging documents are allegations. The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

Updated May 23, 2023

Topic

Financial Fraud

Component

USAO - Massachusetts

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