Denise Bonfilio donated a kidney to Deborah Kitay. They lived together, started a business and raised Kitay's daughter in tandem.
But after federal agencies searched their Sewickley home and accused both of mortgage-related crimes, the kidney recipient decided to cooperate against the donor. As a result, they took dramatically different courses through the justice system, with Kitay, 56, serving 11 months in prison, and Bonfilio, also 56, drawing a 10-year sentence.
The contrast epitomizes the chasm between punishments meted out to mortgage criminals who assisted prosecutors, versus those who exercised their rights to trial.
Kidney transplant adds odd spin to mortgage fraud case
Denise Bonfilio donated a kidney to Deborah Kitay. But after federal agencies searched their Sewickley home and accused both of mortgage-related crimes, the kidney recipient decided to cooperate against the donor. (Video by Melissa Tkach; 5/26/2014)
"I think my sentence was obviously outrageous and not in line with like-minded defendants," Bonfilio said in a March interview.
"The way it works in reality is it's a game of musical chairs in terms of who's going to testify for the government first," said Alexander Lindsay Jr., who represented Bonfilio at her January sentencing hearing. He argued that at least five co-conspirators escaped prosecution by blaming her. "She then becomes solely responsible for [crimes], because when the music stops, she's the one that's left."
"The testimony was uniform from everyone that was involved with [Bonfilio] that she was the ringleader," said Chief Judge Joy Flowers Conti of U.S. District Court, at the hearing.
Bonfilio said in March that she developed a knack for fixing houses when she and Kitay lived in a Penn Hills home with a flood-damaged basement. From there, she ended up working in the Sewickley-area house-flipping market during the height of the housing boom, where she managed rehabs and reconstructions from 2005 through 2008.
Kitay's name was on the business and many of the documents. Bonfilio said that was because Kitay was involved in a custody battle for her daughter and needed to show that she had financial wherewithal.
They borrowed money to fix or enlarge houses. Sometimes they used mortgage broker Jay Berger, who was later charged with defrauding banks and other victims of millions of dollars. He turned into a government informant and died before he served prison time.
With investigators' approval, Berger recorded numerous phone calls with Bonfilio. In early 2009 the FBI and IRS Criminal Investigations searched the home of Kitay and Bonfilio.
Kitay was indicted in May 2009 for wire fraud conspiracy in regard to one Fox Chapel property and two in Sewickley. She was accused of working with Bonfilio and Berger to exaggerate creditworthiness and overstating values and sales prices to secure mortgages. Bonfilio was indicted a month later, for wire fraud and money laundering conspiracy, based on similar conduct involving the same three properties and five others.
According to assistant U.S. attorney James Garrett, the prosecutor who handled Bonfilio's trial and sentencing, the two used the proceeds from outsized, fraudulently obtained loans both to rehabilitate homes and to live lavishly. The two spent money on sailing lessons, yacht club fees, trips to New York City involving $1,295-per-night hotel rooms and swank restaurants, Broadway plays and leased cars, including a Volkswagen Touareg and a Jaguar, according to Mr. Garrett.
Kitay pleaded guilty in 2010. Judge Conti found that she cost investors and lenders more than $1 million and also underpaid the IRS by more than $80,000. Federal guidelines suggested a three-year sentence, but Judge Conti, in apparent recognition of her cooperation with prosecutors, sentenced her to half that.
Bonfilio said she was never asked to cooperate and decided to fight the charges, at least in part on principal. "The government, instead of going after the banks that created it, they're going after everyone below," she said in March.
Key witnesses at Bonfilio's 2012 trial included Kitay and Berger.
Kitay testified that Bonfilio "was always trying to find an appraiser that would get her [the property values] that she needed" to justify the loan she sought. She called her former partner "quite the bully" who was "mean and brutal in speaking" to her and her daughter.
Berger testified to a series of mortgage transactions, some in early October 2006.
Though Bonfilio didn't testify at her trial, she said in March that she could not have done some of the things Berger accused her of because in early October 2006 she "was in Allegheny General Hospital donating my kidney and was not having any conversations."
A jury found Bonfilio guilty on all counts.
One month after the jury convicted Bonfilio, Judge Conti reduced Kitay's sentence to time served. Efforts to interview Kitay were unsuccessful.
Mr. Garrett then sought a double-digit sentence for Bonfilio. He characterized Kitay as "completely buffaloed by Bonfilio (no doubt in part due to gratitude for the latter's donation of a life-saving kidney)."
Mr. Lindsay countered that at least five of Bonfilio's so-called victims -- including several at large real estate firms -- were actually unindicted co-conspirators who participated in the fraud but turned on her when they "didn't get all the money" they expected from her rehab projects.
Judge Conti found that Bonfilio cost lenders and investors $1.7 million, and added sentencing enhancements for the sophistication of the fraud and her leadership role. Bonfilio reported to the minimum security Federal Prison Camp Alderson in West Virginia on March 19. She is appealing her conviction.
"I wish things had turned out differently," Bonfilio said at her sentencing hearing. "I lost friends, a child, my reputation. ... I donated my organ, and somehow that even seemed to be turned into something nefarious."
Rich Lord: firstname.lastname@example.org or 412-263-1542. Twitter @richelord.