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A Somerville real estate broker has pleaded guilty to bilking already troubled clients out of more than $119,000 by using money from their deposits for personal expenses, Middlesex District Attorney Marian Ryan said today.

Farkhanda “Kandy” Tarar Shah, 61, of Peabody, was a licensed mortgage broker and licensed real estate broker doing business as K-Realty in Somerville.

From 2007 to 2009, she repeatedly paid her own business and personal expenses with clients’ deposit money that was supposed to go into a secure escrow account – a violation of Massachusetts Real Estate Law, Ryan said.

In May 2012, when the money believed to have been taken topped $200,000, she pleaded not guilty, but “this defendant has now admitted to stealing money from people who relied on her as a licensed real estate broker to engage in transactions on their behalf,” Ryan said. “She defrauded her clients and betrayed their trust … her actions turned what should have been a positive experience of buying a home into a devastating financial hardship.”

In many instances, the seller of the property was “under water,” and the transaction involved the sale of a home in which the owner’s outstanding mortgage was greater than the current value of the property. Shah’s clients would seek to buy the property in a “short sale” that required the seller and mortgage holder to approve the final price. Such sales are often complicated and frequently are not successfully completed.

When a deal would fall apart and clients would ask for their deposit money back, the defendant would be unable to repay the money – because she had spent it.

The Massachusetts Division of Licensure revoked the defendant’s real estate broker’s license after clients told authorities of the her actions. The Massachusetts Banking Commission revoked her mortgage broker’s license.

The warning signs went back to even before police were called in by an angry homebuyer in April 2010 complaining Shah had embezzled $5,000 while helping him move to Somerville from Revere. “During the investigation, officers learned that the state revoked Shah’s broker license because of some past transactions and also found two other incidents in which Shah has been accused of embezzling $33,000 and $14,500. Both incidents are currently in court,” wrote Auditi Guha in the Somerville Journal.

Shah has pleaded guilty to charges of felony larceny, fiduciary embezzlement and being a common and notorious thief.

Middlesex Superior Court Judge Kenneth Desmond sentenced her to five years of probation and ordered her to pay restitution to nine former clients and to write them a letter of apology.

This post took significant amounts of material from a press release.