Tuesday, October 27, 2009

Couple and Their Real Estate Firm Indicted on Charges They Stole Over $600,000 from Home Sellers

Joann Smith, 44, her boyfriend, Wayne Betha, 39, Ewing, New Jersey, and their real estate company, S&B Property Management and Maintenance LLC, Trenton, New Jersey, were indicted on charges they stole more than $600,000 from home sellers in connection with 11 home sales. They are also charged with defrauding three mortgage companies of $641,800 by falsifying the earnings of applicants for three home loans.

Specifically, the couple was charged with first-degree money laundering, first-degree conspiracy, second-degree theft by deception (2 counts) and third-degree failure to file corporate tax returns, among other crimes.

Arrest warrants were issued for Smith and Betha, who remain at large.

It is alleged that between August 2006 and February 2008, the couple stole more than $600,000 from clients who agreed to have Smith sell their homes. Smith and Betha allegedly diverted proceeds of the sales into their own bank accounts for their personal use, deceiving the sellers into believing they were not entitled to all of the profits from their homes. Most of the sellers were having serious financial problems and could not continue paying their mortgages. The 11 homes are in Trenton (4 homes), Ewing, Hamilton (2 homes), Orange, Willingboro (2 homes), and Camden.

In arranging for sales of three of the homes, the couple allegedly provided false information about the salary or wages of the buyers on settlement forms filed with the U.S. Department of Housing and Urban Development (HUD) and mortgage applications, causing three mortgage companies to issue loans totaling approximately $641,800.

Smith and Betha are also charged with misconduct by a corporate official (2nd degree) and failure to file a tax return (3rd degree). No corporate business tax returns were filed with the State of New Jersey for S&B for 2005 through 2008. Smith also failed to file state personal income tax returns for those years. Betha failed to file a state personal income tax return for 2007.

The couple allegedly used a variety of schemes to fraudulently divert proceeds from the home sales into bank accounts maintained by Smith and S&B, which they allegedly used to launder the stolen funds. They represented to sellers and title companies that monies were owed to them for expenses, including property renovations and repairs that were never done and exorbitant consultant fees that they claimed the sellers had authorized. Many of the checks issued by the title companies handling the property sales were written to the home sellers, but Smith convinced the sellers to sign the checks over to her for payment of business expenses and fees.

It is alleged that, in several instances, the defendants falsely indicated on HUD forms and tax forms that the sellers directly received all of the profits from the home sales. They also omitted to tell sellers that they were agreeing in mortgage closing documents to pay large, unauthorized "seller's concessions or seller's assists" to the buyers.

The victims were not financially sophisticated. They did not understand the details of the property closings and, because of their financial woes, were anxious to be free of the obligation of paying mortgages they could no longer afford. Smith and Betha allegedly took advantage of these facts to steal the victims' profits from the home sales.

Smith sometimes wrote false notations on checks written from her account and the S&B account to make it appear that payments were made for home repairs. Other times she would write a small check to the seller and write "gift" in the memo portion of the check. Smith and Betha used the diverted funds for personal expenses, withdrawing hundreds of thousands of dollars, primarily as ATM withdrawals, checks written to cash, and checks written to Betha.

The first-degree money laundering charge carries a maximum sentence of 20 years in state prison, including a period of parole ineligibility equal to one-third to one-half of the prison sentence imposed, and a fine of up to $500,000. The defendants also could face an additional anti-money laundering profiteering penalty of up to $500,000. Second-degree crimes carry a maximum sentence of 10 years in state prison and a $150,000 fine, while third-degree crimes carry a maximum sentence of five years in state prison and a $15,000 fine.

The indictment is merely an accusation and the defendants are presumed innocent until proven guilty. The indictment was handed up to Superior Court Judge Maria Marinari Sypek in Mercer County.

Attorney General Anne Milgram announced the indictment.

"These defendants are charged with preying on people who had to sell their homes due to financial hardship, taking advantage of their trust and lack of financial sophistication,"said Attorney General Milgram. "They stole from people who had little or nothing to spare."

"It is troubling that dishonest operators see these tough economic times as an opportunity to cash in on others' financial woes,"said Director Gramiccioni. "We are committed to vigorously investigating and prosecuting financial fraud."

Deputy Attorney General Francine Ehrenberg presented the case to the state grand jury. The investigation was conducted and coordinated for the Division of Criminal Justice Major Crimes Bureau by Detective Martin Farrell, Analyst Rita Gillis, and Deputy Attorney General Ehrenberg. The Mercer County Prosecutor's Office provided assistance.

The Division of Criminal Justice has established a toll-free tipline: 1-866-TIPS-4CJ for the public to report corruption, financial fraud and other suspected crimes. Additionally, the public can log on to the Division of Criminal Justice Web page at http://www.njdcj.org to report wrongdoing. All information received through the Division of Criminal Justice Corruption Tipline or Web page will remain confidential.

The Division of Criminal Justice is focusing on complex white collar crime cases, including mortgage fraud and money laundering. During the past two years, the Division has filed or resolved eight cases involving $12 million in mortgage or financial fraud. The cases include the indictment in June 2009 of Yi Feng Reid, Yu Jane Chen and other co-defendants in an alleged $1.1 million conspiracy involving the use of stolen identities to obtain mortgages, other types of loans and credit cards; the sentencing in February 2009 of Spiro Pollatos to 13 years in prison for orchestrating a $2.7 million money laundering conspiracy involving a series of mortgage fraud and investment schemes; and the sentencing in June 2009 of Michael Rumore to 15 years in prison for stealing $4 million entrusted to him as an attorney for real estate closings. 

mortgage fraud