Tuesday, January 15, 2002

Monmouth Lawyer Admits Arranging More Than 200 "Land Flip" Deals

A Matawan, New Jersey attorney admitted in court his role in a scheme to defraud purchasers of over-valued and fraudulently mortgaged homes in Monmouth County, New Jersey and elsewhere and to engaging in more than 200 “land flip” transactions with straw buyers, U.S. Attorney Robert J. Cleary announced.

Stanley Yacker, 64, who was awaiting trial on the charges along with two real estate agents, pleaded guilty before U.S. District Judge Alfred M. Wolin to all 10 counts of an Indictment, which charged him with conspiracy to commit wire fraud and nine counts of wire fraud. Yacker also pleaded guilty to a new Information, charging him with conspiracy to commit wire fraud in connection with the more than 200 fraudulent property transactions, or “land flips,” according to Assistant U.S. Attorney Alain Leibman.

Yacker admitted that those property transactions involved not genuine purchasers but straw buyers who were paid for the use of their names and credit histories to obtain fraudulent mortgages for the properties.

Yacker, whose sentencing was scheduled for May 14, was indicted in January 2001 with Irene DiFeo, a real estate agent in Hazlet, New Jersey and Donna Pepsny, a real estate agent in Rumson, New Jersey.

Yacker, who remains free on a personal recognizance bond, faces a maximum sentence on each count of five years in prison, a $250,000 fine and an order of restitution.

Yacker admitted, as charged in the Indictment, that, as an attorney in New Jersey, he was subject to various ethical obligations toward his clients, including sufficiently explaining a matter to permit the client to make informed decisions; avoiding conflicts between the interests of a client and his own interests; and to refrain from engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation.

Instead, Yacker admitted, he acted with DiFeo and Pepsny, among others, to engage in a scheme to defraud and to obtain money and property by means of false and fraudulent pretenses, representations, and promises, involving persons he represented in connection with their purchases of homes in 1995 and 1996.

Specifically, Yacker told the court that he had committed a variety of fraudulent acts, including the following:

? misrepresenting the nature and interest rate of the mortgage loan for which the purchaser had qualified - by failing to adequately explain the nature and consequences of the balloon first mortgage and the fact that tax payments were not included in the first mortgage payment - and the amount of the resulting monthly payment;

? failing to disclose to purchasers that, as a result of the purchaser’s minimal down payment and the fraudulent increase of the purchase price, the seller would require the purchaser to execute at closing and become responsible for a second mortgage, thereby increasing the purchaser’s monthly mortgage obligations;

? concealing the fact that some purchasers received funds out of closing to make repairs, by issuing checks to the purchasers in the names of other persons or entities;

? causing the falsification of numerous documents related to the transaction, including HUD-1/RESPA settlement statements which disguised the true nature and details of the transaction;

? failing to advise his purchaser-clients to abandon the closing when it was in their best interest to do so, and in fact encouraging or pressuring them to complete the closing under those circumstances, even after acknowledging in at least one instance that the purchasers’ signatures on a contract of sale had apparently been forged or falsified;

?in one instance creating a fictitious sale of a property to a purchaser’s relative who would then convey the property to the actual purchaser, in order to justify a false increase in the final purchase price of the home and to inflate the amount of the mortgage loan available for the transaction;

? creating the false appearance in the mortgage loan file that debts of the purchasers were paid off as part of the closing, as required by a lender, by photocopying checks written by the purchasers which you then returned to them;

? failing to record deeds to establish and protect the purchasers’ interests in their properties.

In connection with the additional charge in the Information, Yacker told the court that in 1996 and 1997 Gary Grieser and others solicited and located persons willing to act as straw buyers in numerous transactions, whereby mortgage loans would be obtained and the properties acquired in the names of the straw buyers, even though those persons actually had no interest in obtaining such loans or purchasing such properties. After the closing on those properties each straw buyer conveyed a 60-percent interest in the given property to Grieser‘s entity, Capital Assets, in a joint venture arrangement which left the straw buyer holding a 40-percent interest as co-owner with Capital Assets.

Yacker admitted that, with the assistance of Lorraine King, his legal secretary, who previously entered a plea of guilty herself, he prepared the joint venture agreement used in those transactions. Yacker also acknowledged that he knew that each of the straw buyers was being paid for the use of their names and credit histories in obtaining the subject mortgage loans and in acquiring the subject properties.

Yacker told Judge Wolin that he committed various fraudulent acts to further the straw buyer scheme, including:

? issuing false letters regarding non-existent deposits of funds by purchaser-borrowers, which funds he claimed to be holding in escrow;

? closing title on the resale portion of flip transactions knowing that the original purchase of the property had not yet closed; and

? signing and causing straw buyers to sign false and fraudulent closing documents, including HUD-1/RESPA settlement statements which did not truthfully describe receipts and disbursements of funds, and affidavits which falsely asserted that the straw buyer would be residing in the subject property.

mortgage fraud