Phil A. Simon, 35, and Garth Celestine, 46, both of Brooklyn, New York, were sentenced for conspiring with each other and others in a mortgage fraud scheme that falsely promised to help homeowners facing foreclosure keep their homes and repair their damaged credit.
Simon and Celestine were sentenced to 66 months and 36 months in prison, respectively. Both defendants previously pleaded guilty before U.S. District Judge Dennis M. Cavanaugh to conspiracy to commit wire fraud. Judge Cavanaugh also imposed the sentence in Newark federal court.
According to documents filed in this case and statements made in court:
From 2004 to 2007, Simon and Celestine owned and operated Home Savers Consulting Corp., which held itself out as a foreclosure rescue company with two locations in New York. Simon and Celestine conspired with each other and others to defraud both homeowners facing foreclosure and mortgage lenders by making false statements and promises. Simon and Celestine defrauded more than 40 homeowners and mortgage lenders, causing losses to the victims of more than $3.3 million.
Home Savers advertised to homeowners and promised to help them avoid foreclosure, keep their homes and repair their damaged credit. Simon and Celestine told the homeowners they could avoid foreclosure by signing contracts of sale and transferring title to their homes to individuals who would act as “straw buyers” of the properties. Simon and Celestine promised the homeowners that after they transferred their title to these straw buyers, Home Savers would help them improve their credit ratings, help them obtain more favorable mortgages on their homes, and ultimately direct the straw buyers to transfer the title to their homes back to the homeowners within six months to one year. Simon and Celestine typically told the homeowners the equity withdrawn from their properties would be kept in a separate account and used to pay the mortgages and expenses on their homes.
After the homeowners were signed up, Simon and Celestine recruited individuals with good credit scores to act as straw buyers and paid them about $10,000 per property. Using the homeowners’ properties and the good credit ratings of the straw buyers, Simon and Celestine applied for mortgages in the names of the straw buyers to extract the maximum available equity from the homes.
To increase the creditworthiness of the straw buyers and to ensure they would be approved for the loans, Simon and Celestine submitted to the mortgage lenders loan applications that contained false personal and financial information about the straw buyers, such as their stated employment history and income. They also falsely represented to the mortgage lenders that the straw buyers intended to occupy the property that would secure each mortgage loan as their primary residence, when, in fact, the homeowners planned to stay in their homes.
After each homeowner’s debt was paid off and other fees were satisfied, the defendants deposited the remainder of the loan proceeds into the bank accounts of Home Savers, 527 Maple Court Corp., 858 Atlantic Avenue Corp., and Keep What’s Yours Inc., companies that Simon and Celestine owned and controlled.
In addition to the prison terms, Judge Cavanaugh sentenced Simon and Celestine each to three years of supervised release. Restitution will be determined at a future date.
U.S. Attorney Paul J. Fishman announced the sentences.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Michael B. Ward; and the inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge Philip R. Bartlett, for the investigation leading to today’s guilty plea. He also thanked Kings County District Attorney Charles J. Hynes for the assistance and cooperation that was provided by his office. The investigation is continuing.
The government is represented by Assistant U.S. Attorney Christine Magdo of the U.S. Attorney’s Office Economic Crimes Unit in Newark.