Thursday, October 09, 2008

3 Guilty Pleas In Multi Million Dollar Mortgage Fraud Case

Garri Zhigun, 31, and his mother Galina Zhigun, 54, operators of mortgage brokerage firm AGA Capital NY, Inc. ("AGA Capital"), and Maryann Furman, 30, an employee of AGA Capital, pleaded guilty in Manhattan federal court to participating in a multimillion-dollar subprime mortgage fraud scheme. According to the Indictment, other documents filed in the case, and statements made during the guilty plea proceedings:

As previously reported by Mortgage Fraud Blog, from 2004 to 2006, AGA Capital was a mortgage brokerage firm with various office locations in Brooklyn, New York, which in late 2006, changed its name to Lending Universe Corporation ("Lending Universe"). Galina Zhigun was the record owner and registered broker of AGA Capital, Furman was the office manager of AGA Capital, and Garri Zhigun supervised the operations of AGA Capital. From 2004 through January 2007, Garri Zhigun, Galina Zhigun and Furman participated with others, including a lawyer, loan account officers, real estate appraisers, and straw buyers, in a scheme to defraud various subprime banks and lending institutions. During the course of the fraudulent scheme, AGA Capital earned several million dollars in commission fees for brokering hundreds of home mortgages and home equity loans with a total face value of at least $200 million dollars. The scheme involved submitting to subprime lenders loan applications and supporting documents, which contained false information and material omissions, in order to induce the lenders to make loans that otherwise would not have been funded.

As part of the scheme, Garri Zhigun, Galina Zhigun and Furman purchased a block of ten rent-regulated condominium apartments at 243 West 98th Street, Upper West Side, Manhattan ("the Apartments"). With respect to seven of the ten Apartments, subprime lenders were falsely told in mortgage applications and supporting documents that the buyers intended to live in the Apartments as a “primary residence.” With respect to there maining three Apartments, subprime lenders were falsely told that the Apartments were to be used as “investment properties” that earned approximately $6500 a month in rent from tenants. None of the documents submitted to the subprime lenders disclosed that: (1) certain buyers were seeking loans to purchase more than one Apartment as a “primary residence;” (2) each of the Apartments was already occupied by a tenant and therefore not suitable for a primary residence; or (3) the Apartments were subject to rent regulation laws that precluded the buyer from charging $6500 in rent.

Twenty-six other individuals were charged in connection with this scheme. Eight have pleaded guilty. Six are scheduled to go to trial on November 17, 2008, and the remaining nine defendants are scheduled to go to trial on January 19, 2009. As to the defendants awaiting trial, the charges are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

Garri Zhigun pleaded guilty to one count of conspiracy to commit mail, wire, and bank fraud. He faces a maximum sentence of thirty years in prison, a fine of the greater of $1,000,000 or twice the gross pecuniary gain or loss resulting from the crime, and an order to pay restitution to the victims of his crime. Garri Zhigun also agreed to forfeit a total of $2,500,000.

Galina Zhigun pleaded guilty to one count of bank fraud. She faces a maximum sentence of thirty years in prison, a fine of the greater of $1,000,000 or twice the gross pecuniary gain or loss resulting from the crime, and an order to pay restitution to the victims of his crime. Galina Zhigun also agreed to forfeit a total of $1,000,000.

Maryann Furman pleaded guilty to one count of wire fraud. She faces a maximum sentence of thirty years in prison, a fine of the greater of $1,000,000 or twice the gross pecuniary gain or loss resulting from the crime, and an order to pay restitution to the victims of her crime. Furman also agreed to forfeit a total of $1,000,000.

Sentencing of Garry Zhigun, Galina Zhigun, and Maryann Furman is scheduled for January 5, 2009.

Mr. Garcia praised the investigative work of the Federal Bureau of Investigation, the New York City Police Department, and United States Department of Homeland Security’s Immigration and Customs enforcement.

Assistant United States Attorneys Katherine R. Goldstein, Jonathan B. New, and Avi Weitzman are in charge of the prosecution.

mortgage fraud