MARBLEHEAD — A disbarred Marblehead lawyer, on probation for a failed scheme to swindle $1.3 million by claiming to hold mortgages on properties in foreclosure, is now facing the foreclosure of his own home.
But Leon Gelfgatt, who apparently stopped making payments on his 75 Garfield St. home years ago, claims in a lawsuit that he’s under no obligation to make any mortgage payments — because, he says, the mortgage was discharged when he filed for bankruptcy in 2014.
Of course, the bank that holds the mortgage disagrees. Now, after several rounds in state court over their attempts to foreclose, U.S. Bank has had Gelfgatt’s latest lawsuit transferred to federal court.
The house, which he purchased in 2003, had been scheduled for a foreclosure auction last month. But Gelfgatt got that delayed by filing the suit, according to court papers.
Though he no longer has a law license, Gelfgatt is able to represent himself “pro se,” or not represented by a lawyer.
In his suit, filed in Suffolk Superior Court last month, Gelfgatt contends that after his bankruptcy filing, the mortgage was essentially wiped away, and is no longer valid under an “obsolete mortgage” statute of limitations.
U.S. Bank, meanwhile, says in court papers that Gelfgatt is simply wrong on the law — that the bankruptcy did not absolve him of having to pay the mortgage on his home, and that the statute cited by Gelfgatt would only apply five years after the maturity date of the mortgage, which isn’t until 2025.
The bank moved the case to U.S. District Court last week.
Gelfgatt was indicted in 2010 after investigators learned of his attempted scheme to profit off of other people’s foreclosures.
Prosecutors said the attorney, who also held a real estate license, found a couple of inactive corporations, then used those entities to pose as businesses who were owed proceeds from the sale of high-end foreclosed properties. He found the properties, scattered across eastern Massachusetts, through his access to the Multiple Listing Service.
Gelfgatt then forged documents purporting to be mortgage assignments and filed them at county deed registries in Essex, Suffolk and Norfolk counties, prosecutors said and Gelfgatt eventually admitted.
Then, he instructed the attorneys handling the closings on the sold properties to forward payoff amounts to the sham businesses, which he controlled.
But investigators were tipped off by a bank and Gelfgatt was charged.
The criminal case was delayed for several years while the attorney fought a request by prosecutors for the key to unencrypt his computer files, which had been seized. The Supreme Judicial Court eventually sided with prosecutors.
He ultimately pleaded guilty to multiple counts of forgery and attempting to commit a crime in 2016 and was placed on 10 years of probation. He was also barred from working as either a lawyer or a real estate broker.
Courts reporter Julie Manganis can be reached at 978-338-2521, by email at email@example.com or on Twitter at @SNJulieManganis.