Conviction Obtained in $18M Mortgage Fraud Case

admin —  February 18, 2010 — Leave a comment

Eliyahu Ezagui, 49, a real estate developer in the Crown Heights neighborhood of Brooklyn, New York, has been found guilty of conspiracy to commit bank and wire fraud, and five counts of bank fraud.

According to evidence presented at the trial, and as previously reported on Mortgage Fraud Blog, Ezagui solicited option agreements from numerous individuals to purchase condominiums in Brooklyn, New York prior to the condominiums’ construction. Option prices were between approximately $90,000 and $160,000 per unit. In exchange, the individuals who signed option agreements received contracts which entitled them to the deed for a specified unit upon completion of construction. After the properties were built, Ezagui provided access to the units, and the families moved in, believing they were the rightful owners. However, Ezagui failed to transfer the deeds to the purchasers and instead sold them to straw borrowers, including himself and his family members. Ezagui then claimed to have sold the apartments to himself and his family members for up to four times the price paid by the true purchasers. Based on his false representations, Ezagui obtained mortgages on the units from various lending institutions. To conceal the fraud and to prevent the mortgages from being declared delinquent, Ezagui caused monthly mortgage payments to be made for several years. However, in approximately 2007, Ezagui stopped paying the mortgages. As a result, the condominium purchasers are now facing foreclosure of their residences, and the financial institutions incurred losses totaling approximately $10 million.

Protecting home buyers and financial institutions from mortgage fraud schemes is a priority of this Office and the Department of Justice,” stated Benton J. Campbell, United States Attorney for the Eastern District of New York. “Those who engage in such criminal conduct will be aggressively investigated and prosecuted.” Mr. Campbell expressed his grateful appreciation to the Postal Inspection Service for its investigative work and assistance during the trial.

When sentenced by United States District Judge Frederic Block, the defendant will face a maximum sentence of 30 years’ imprisonment on each count of conviction.

The government’s case was prosecuted by Assistant United States Attorneys Melissa B. Marrus and William E. Schaeffer.


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