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Rachel Dollar, the editor of Mortgage Fraud Blog, is an attorney and Certified Mortgage Banker who handles litigation for lending institutions and secondary market investors. She is an author and a nationally recognized speaker on the topic of mortgage fraud. Ms. Dollar is a shareholder with the law firm of Smith Dollar, PC, is licensed to practice law in California and maintains offices in Santa Rosa, California. Email Ms. Dollar
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New York AG Complaint Targets Flipping Scheme in Minority Neighborhoods
A lawsuit alleging that a group of real estate sellers, mortgage brokers, attorneys, and appraisers pursued a fraudulent real estate flipping scheme targeting minority neighborhoods in Brooklyn, New York was filed by New York State Attorney General Eliot Spitzer. Consent decrees have been entered into with some of the defendants that will provide substantial monetary relief to victims and stringent oversight of future real estate activities by the settling defendants. The defendants named in the lawsuit are:
Isaac Katz, Brooklyn, New York
Yoel Silberstein, Brooklyn, New York
Amenophis Alleyne, Plainfield, New Jersey
Shaya Saks, Brooklyn, New York, mortgage broker
Theodore Welz, Brooklyn, New York, mortgage broker
Benzion Frankel, Brooklyn, New York, attorney
Rephoel A. Weitzner, Brooklyn, New York, attorney
Devon Clarke, Brooklyn, New York, attorney
Joseph Treff, Brooklyn, New York, attorney
Erik B. Johnson, Ronkonkoma, New York, appraiser - Johnson and Rose Appraisal Services
Jeffery Richardson, Brooklyn, New York, appraiser
According to the lawsuit, defendants Isaac Katz and Yoel Silberstein devised a scheme in which they purchased distressed properties in the Brooklyn, New York neighborhoods of Crown Heights, Bedford-Stuyvesant, East Flatbush, East New York and Bushwick, and then enlisted the services of a front-man, mortgage brokers, and real estate lawyers to dupe purchasers and lending institutions in order to obtain significant resale profits.
The lawsuit alleges that defendant Amenophis Alleyne found prospective minority buyers with excellent credit to purchase the properties. The minority buyers, many of whom were Alleyne‘s family and friends, allegedly were told that the properties were “investment opportunities” that could be purchased with no money down. They were also assured that rental income they would receive from prospective tenants would more than cover any mortgage payments.
According to the complaint, the mortgage brokers, defendants Theodore Welz and Shaya Saks, induced banks into issuing loans for the properties by preparing loan applications that misrepresented the borrowers’ income and assets and falsely stated that the borrowers were making significant down payments. According to the lawsuit, the banks were also provided with false appraisals, prepared by real estate appraisers including defendants Jeffery Richardson and Erik Johnson, that significantly inflated the values of the properties.
Defendants Benzion Frankel, Rephoel Weitzner, Devon Clarke, and Joseph Treff, the real estate attorneys who represented the lenders, the buyers and the sellers at the closings, prepared loan documents and public filings (including deeds and real estate transfer tax records) that allegedly misrepresented the actual sales prices of the properties.
According to the lawsuit, defendants Katz and Silberstein reaped substantial profits from their fraudulent scheme, which was carried out dozens of times between 2002 and early this year. In one case identified in the suit, they purchased a property for $205,000 and sold it later the same day for $370,000. The buyers, the lawsuit alleges, were unaware that their “no money down” deals were being accomplished only by hiding the true nature of the transactions from their lenders. As a result, many buyers were saddled with large, high-interest-rate mortgages they could not afford. Some allegedly ended up in default and foreclosure, ruining their once-excellent credit. The lawsuit further alleges that the scheme artificially inflated market prices of homes in the affected neighborhoods as appraisers, sellers, real estate brokers and others seeking to value properties in those areas relied on the false sales prices reported in deeds and other public records.
“The perpetrators of this scam promised minority home buyers an opportunity to climb the economic ladder,” Spitzer said. ”In reality, the defendants profited handsomely while their victims saw their financial security impaired or even ruined. By imposing significant monetary penalties on the participants in the scheme, we hope to send the message that fraudulent and discriminatory real estate deals will not be tolerated in the State of New York.”
The Attorney General has entered into consent decrees resolving the lawsuit against defendants Katz, Silberstein, Welz and Saks. The decrees require:
• payment of nearly $1.8 million in restitution and penalties;
• a detailed accounting of the real estate transactions conducted by the mortgage fraud ring;
• extensive monitoring of future real estate activities by defendants Katz and Silberstein; and
• significant restrictions on mortgage brokering activities by defendants Welz and Saks.
The funds remitted pursuant to the decrees will be used to compensate victims of the scheme who file complaints with the Attorney General. Any remaining funds will be retained by the State as penalties.
The lawsuit will proceed against defendant Alleyne as well as defendants Clarke, the lawyer for the buyers at the closings; Frankel and Weitzner, lawyers for the defrauded banks; Treff, the lawyer for defendants Katz and Silberstein; and Richardson and Johnson, the appraisers.
Properties were not identified in the Complaint by address but only by street name, including: Belmont Avenue, Hart Street, Cleveland Street, Chauncey Street, Halsey Street, Lafayette Avenue and East 55th Street.
This defendant Isaac Katz is connected with the Mafia Boss Louis Kestenbaum that defrauds the state and federal gov’t with fraudelant grants, its about time these Chasidic thugs are laid to rest.
Posted by on 12/11 at 08:08 AM
still seems like a light sentence for ruining people lives,
they should do jail and never be able to have anything to do with real estate ever!
Posted by on 12/19 at 07:17 PM
ELIEZER ( LOUIS ) Kestenbaum was also arrested with the rabbi of spinka as being a part of the money laundering team. Kestenbaum is the president of the ODA organization in Williamsburg brooklyn NY
Posted by on 12/20 at 04:46 AM
William and Victoria Rollins brought a home in 2004 from Hatzlucha Management LLC and the real estate attorneys Joseph Treff was at the closings,and preared loan documents and public filings. I have been looking for the two parties and have not found them yet. Can you please fine me someone who can help us in Paterson, New Jersey. We found all kinds of garbage in the walls, hols in the roof that was supose to be new, never fininshed putting in the windows in the basement, plumbing, electrical and never came back to fix the deck. We was getting insolation put in the lemon home and thats when we discover a another part of the house that’s not even done. Can you please fine away to get us some help in Paterson, New Jersey. Thank You.
Posted by on 04/10 at 10:51 AM
Louis Kestenbaum from williamsburg the ODA and fortis is an old diviant and crook, he was on trial just recently in ohio for similar diuretic acts, He is known as a vulgar person who behaves like an animal in the presence of good looking women, What about the story in Romania ? He was jailed briefly there when the old satmar rebbi died and he wasnt able to be at the levia.. or the story with girls in thailand asia? Bottom line Louis kestenbaum is bad news I would not let my kids and so would alot of people in williamsburg not allow their kids near him. he is just a doberman in disguise of a human
Posted by on 04/24 at 06:27 AM
A Sordid Lawsuit Shakes the Satmar Chasidic world .
Brooklyn N.Y. Lezer ( Louis ) Kestenbaum chairman of the ODA in Williamsburg Brooklyn NY resigned from the ODA soon after settling a lawsuit filed in May in U.S. District Court for the District of Florida for an undisclosed sum alleging he had a sexual relationship with a minor, Joel Kestnbaum the son of Louis kestenbaum will become chairman of the ODA.
Greenfield Man Accused of Housing Scam The Republic
A former real estate agent conned at least eight people by renting them properties actually owned by a federal agency and then running off with their deposits, prosecutors said.
Appraisal Institute Opposes Obama Administration's Plan for Homeowner 'Short Sales' PR News Wire
Citing concerns about increased mortgage fraud, four organizations representing more than 35,000 real estate appraisers today voiced their opposition to changes to an Obama administration program that will encourage "short sales" of homes.
Ownership Rights to Get Another Look TBO.Com
State lawmakers may beef up protections of property owners' rights by rewriting a law this spring that is at the center of a case of alleged fraud in Pasco County.
Defaulted Loans May Haunt Seniors On Line WSJ.Com
A little-noticed law could soon result in smaller Social Security checks for hundreds of thousands of the elderly and disabled who owe the U.S. money from defaulted loans and other debts more than a decade old.
Oregon to Help Homeowners Prevent Foreclosures CBS State
As part of an ongoing effort to help homeowners avoid foreclosure, state agencies are organizing a foreclosure-prevention event in Bend on Saturday, March 27, 2010.
Couple Loses $850,000 in Alleged Ponzi Scheme Boston Herald
Al and Susan McIlvene of Kittery Point, Maine, can remember the exact moment in November when they realized they might lose their entire life savings of $850,000, reports the Portsmouth Herald.
Mortgage Fraud Charges Filed Against Former Bakersfield Realtor, Her father KGET.Com
A former Bakersfield real estate agent and her father face 15 felony counts each of money laundering, conspiracy and grand theft in connection with an alleged multi-million dollar mortgage fraud scheme, newly filed court charges show.
Witness: Mortgage Name Not the Same Clarion Ledger
A former Clinton homeowner was called to testify Wednesday as prosecutors to try to prove a Ridgeland-based mortgage broker and two associates were behind a $9 million mortgage fraud scheme.
Thursday, February 18, 2010 F. Jeffrey Miller Trial Continued Testimony
As reported by Anne Mitchell, who viewed the trial:
Angela Parenza worked for Jeff Miller as the office manager for 7 or 8 years beginning in 1998. Parenza was indicted along with Miller and pled guilty to conspiracy to commit bank fraud and money laundering. Parenza testified that Miller or his contractors allegedly preferred to build all the...
Wednesday, February 10, 2010 F. Jeffrey Miller Trial Coverage Continued - Witness Testimony
Steve Middleton Testimony - Coverage Provided by Anne Mitchell
The Government continued in its cross examination of Steve Middleton. He was shown several HUD-1 statements involving sales of homes located in Overland Park, KS, and Olathe, KS. The HUD statements each allegedly showed line items of payments to (James) Moser & Associates, LLC's...
Monday, February 01, 2010 F. Jeffrey Miller Trial Coverage - Continued Witness Examination
According to Anne Mitchell, who is present in court for the trial:
Next Witness: Kelly Sanford
Kelly Sanford of the Federal Reserve was a short witness for the Government. Sanford manages electronic payments between banks and member financial institutions. He was shown copies of wire transfers and asked whether they coincided with the counts in...
Wednesday, January 27, 2010 F. Jeffrey Miller Trial - Prosecution Witnesses Continued
According to Anne Mitchell, who is viewing the trial:
January 13, 2010
Witness: Rick Hayes
Rick Hayes testified that on the day that he closed on his Miller Enterprise home, he received a phone call from the Kansas Banking Commission informing him that his loan was fraudulent. After the Hayes responded to a classified ad, they met with John...
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The information and notices contained on Mortgage Fraud Blog are intended to summarize recent developments in mortgage fraud cases and mortgage banking matters nationwide. The posts on this site are presented as general research and information and are expressly not intended, and should not be regarded, as legal advice. Much of the information on this site concerns allegations made in civil lawsuits and in criminal indictments. All persons are presumed innocent until convicted of a crime. Readers who have particular questions about mortgage banking, mortgage fraud matters or who believe they require legal counsel should seek the advice of an attorney. The creators, editors and sponsors of Mortgage Fraud Blog do not intend to create a confidential relationship or an attorney-client relationship by communication via or arising from this site.
Rachel Dollar, the editor of Mortgage Fraud Blog, is an attorney and Certified Mortgage Banker who handles litigation for lending institutions and secondary market investors. She is an author and a nationally recognized speaker on the topic of mortgage fraud. Ms. Dollar is a shareholder with the law firm of 
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