A Long Island man, Michael O'Sullivan, is at the center of allegations involving a sophisticated real estate scheme that has defrauded families in the Hamptons out of millions of dollars, according to over a dozen lawsuits and an investigation by the New York State Attorney General.
O'Sullivan, founder of Hampton Dream Properties, allegedly exploited distressed homeowners and then resold their properties to unsuspecting buyers without resolving existing mortgages and liens. His strategy, developed after attending a real estate seminar focusing on post-2008 financial crisis foreclosures, involved locating homeowners who had abandoned their properties and offering them cash for their deeds. O'Sullivan would then sell these properties to buyers seeking deals in the high-value Hamptons market.
"You offer somebody who’s about to lose their house $25,000, $15,000 cash to sign over their deed, they’re going to say ‘Yeah, I’d love to,’" a former associate told Curbed. The associate described the scheme as predatory, alleging that O'Sullivan found a way to profit from both ends by selling deeds while underlying mortgages remained unresolved.
Plaintiffs claim O'Sullivan misrepresented the title status of properties, sold homes he did not legally own, secured high-value loans by holding onto deeds, and diverted buyer payments towards new acquisitions instead of settling existing debts. Many of the alleged victims were Latino first-time homebuyers with limited English proficiency, who were reportedly discouraged from hiring their own attorneys.
One couple, Diana and Mauricio, who had lived in the Hamptons for 15 years, paid O'Sullivan nearly $200,000 under a private mortgage agreement and invested an additional $300,000 in renovations. Two years later, they received a foreclosure notice. Over the next seven years, O'Sullivan allegedly assured them the situation was under control and even pressured them to file for bankruptcy twice. The couple claims they were eventually coerced into signing a document that facilitated a short sale back to O'Sullivan's company, which then allegedly sold the property to a newly created corporation and secured a $900,000 mortgage on it.
Other victims have reported similar experiences. Juan Amon, who had paid over $350,000, was informed by East Hampton police that he was not the legal owner of his home. Rosa Quituisaca discovered multiple liens on her property, including some linked to O'Sullivan's personal debts like traffic tickets. Milton Barrera returned home to find a stranger claiming to have purchased his house from the bank.
O'Sullivan has maintained that his intentions were legitimate and that the foreclosure market was inherently risky, a fact he claims buyers were aware of from the outset. He has also stated that he could have resolved these cases if legal actions had not been pursued.
In May, O'Sullivan filed for bankruptcy, which has temporarily halted active litigation. The New York State Attorney General's office has opened an investigation into O'Sullivan for deed and mortgage fraud.