Federal Offenses—

Former Newtown Oil Operator Indicted On Bank Fraud Charges

By Andrew Gorosko

One of the operators of the now-defunct Newtown Oil Company, who last year was found guilty of swindling oil company customers, is now facing federal charges alleging that she defrauded banks of more than $3.5 million in connection with bogus mortgage applications.

A federal indictment returned by a Bridgeport grand jury on October 7 charges Heather Bliss, 34, of Norwalk with one count of conspiracy to commit bank fraud and with three counts of bank fraud, stemming from an alleged mortgage fraud scheme.

On October 8, Ms Bliss appeared before US Magistrate Judge Holly B. Fitzsimmons and entered a plea of not guilty to each of the four charges. Following her arraignment, Ms Bliss was released on $250,000 bail, according to a statement from Nora Dannehy, the US Attorney for the District of Connecticut.

Ms Bliss is the wife of William A. Trudeau, Jr, 46, with whom she formerly operated the Newtown Oil Company.

 In November 2008, a judge in Danbury Superior Court spared the couple from serving prison time because they came up with almost $122,000 in restitution to be distributed to customers of the former oil company who were bilked out of that money in late 2002, when the firm failed to honor fraudulent prepaid contracts for home heating fuel delivery. The judge, however, did give Mr Trudeau and Ms Bliss lengthy suspended prison sentences, plus probation, intended to serve as a deterrent against their again committing white-collar crimes.

In August 2008, the judge had found both Mr Trudeau and Ms Bliss each guilty of nine larceny-based felonies in the Newtown Oil Company scam involving the firm’s failure to deliver #2 home heating fuel in late 2002 to about 1,400 customers from nine towns who had entered prepaid fuel contracts with the firm. Both Mr Trudeau and Ms Bliss had entered Alford Doctrine pleas to each of the nine felony counts. In such pleas, the defendants do not admit guilt and assert their innocence, but acknowledge that sufficient evidence exists for a conviction by a judge or jury.

Also, Mr Trudeau was required to pay a more than $250,000 civil lawsuit settlement over the heating fuel scam. That lawsuit had been filed by the state attorney general’s office.

Newtown Oil was formerly located at 47-49 South Main Street. The firm went out of business in December 2002.

State’s Attorney Stephen J. Sedensky III, who prosecuted the state’s case against Ms Bliss and Mr Trudeau in 2008, said this week that because Ms Bliss allegedly committed the illegal acts described in the federal indictment before she was convicted in the state prosecution of the Newtown Oil Company case, the federal indictment does not represent a violation of the five-year probation which Ms Bliss received in the state’s case.

The federal indictment against Ms Bliss alleges that she was employed as a paralegal for a real estate lawyer in Wilton and, in that capacity, had responsibility for preparing and maintaining all legal and bank documents related to real estate transactions handled by her employer.

The document alleges that from approximately April 2006 to April 2007, people including Ms Bliss, the lawyer for whom she worked, a property developer, and others conspired to defraud JP Morgan Chase Bank, IndyMac Bank, and Washington Mutual Bank in a Fairfield County mortgage fraud scheme.

The legal papers further allege that Ms Bliss and her co-conspirators submitted false mortgage loan applications to financial institutions to obtain mortgages on various properties in Fairfield County in order to develop and sell the properties for profit, and to pay off debts owed to “hard money” lenders from whom they had previously obtained high-interest loans.

The mortgage applications, which included false income information and omitted the mortgage applicants’ true indebtedness, caused the financial institutions to issue mortgage loans on properties that Ms Bliss and her co-conspirators would not have otherwise been qualified to purchase, thus allowing the applicants to qualify for mortgages that far exceeded their ability to repay the loans, according to the court documents.

The indictment alleges that Ms Bliss overstated her income on the mortgages for which she had personally applied, and that she applied for new mortgages within 60 days of receiving prior mortgages, knowing that the earlier mortgages would not be revealed when her credit report was run by the financial institutions to which she applied.

Through the mortgage scheme, the indictment alleges that Ms Bliss and her co-conspirators defrauded the three financial institutions of a total of more than $3.5 million.

If she is convicted of the criminal charges, Ms Bliss faces a maximum prison term of 30 years on each count of the four counts, and a fine of up to approximately $7 million.

Attorney Andrew Bowman of Westport, who represents Ms Bliss, could not be reached for comment on Ms Bliss’s indictment.

Ms Dannehy stressed that an indictment is only a charge and is not evidence of guilt. The defendant is entitled to a fair trial at which it is the government’s burden to prove guilt beyond a reasonable doubt, the US attorney said.

The mortgage fraud case is being investigated by the Federal Bureau of Investigation (FBI) and is being prosecuted by Assistant US Attorney Rahul Kale.