Michael Kaufman, 43, Reading, Pennsylvania, the CEO and founder of purported real estate investment firm Home Start America, Inc. (“HSA“) who directed a long-running, large scale wire fraud conspiracy with loan officer David Wynn through Kaufman‘s company, was sentenced to 50 months in prison for his role.
Kaufman pleaded guilty on April 11, 2011, to a Superseding Indictment charging him with conspiracy to commit wire fraud. Kaufman entered his guilty plea before U.S. District Judge Dennis M. Cavanaugh, who also imposed the sentence in Newark federal court. Judge Cavanaugh also ordered Kaufman to pay $1,336,399 in restitution.
According to documents filed in this case and statements made in court:
Kaufman founded HSA in Bloomfield, N.J., and at one time employed more than 30 people. Kaufman, through HSA, purchased and sold residential real estate properties. As part of the scheme, Kaufman and others recruited people””often first-time home buyers””to purchase properties quickly, with promises of no money down, no closing costs, and repairs paid for by HSA. Kaufman would then steer the purchasers to loan officers, including Wynn, 45, Englewood, N.J.
Many of the properties sold by HSA had actually been bought by HSA shortly before, and then “flipped” to the unsuspecting buyers for far more than HSA paid. Kaufman, Wynn, and others falsely inflated the buyers’ income and assets on loan documents to make it appear that the buyers could afford the properties HSA was selling, when the purchasers did not have the means to buy the properties.
Victim financial institutions””relying on the false figures in the loan documents””then issued the mortgage loans, unaware of the purchasers’ true financial conditions. HSA and Kaufman received illicit profits when the transactions closed, and Wynn and other loan officers received commissions for their fraudulent work. After the closings, the buyers could not make the payments on the properties, and nearly always lost the properties to foreclosure. The fraud, which began as early as 2002 and lasted through June 2005, caused over $1.5 million in loss to the banks, and earned hundreds of thousands of dollars in profits for Kaufman and HSA.
In addition to the prison term and resitution, Judge Cavanaugh sentenced Kaufman to three years of supervised release.
Wynn was sentenced on Oct. 17, 2011, to a year and a day in prison for his role in the conspiracy. Judge Cavanaugh also sentenced him to three years of supervised release and ordered him to pay $171,000 in restitution.
U.S. Attorney Paul J. Fishman announced the sentence.
U.S. Attorney Fishman praised the Department of Housing and Urban Development’s Office of Inspector General, under the direction of Joseph W. Clarke, Special Agent in Charge for the Mid-Atlantic Region; and the FBI, under the direction of Special Agent in Charge Michael B. Ward, for the investigation leading to today’s sentence.
The government is represented by Assistant U.S. Attorneys Bohdan Vitvitsky and Zach Intrater of the U.S. Attorney’s Office Economic Crimes Unit in Newark.