Thursday, November 30, 2006
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.
mortgage fraud
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.
Posted by on 09/09 at 07:23 AM
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Trial coverage provided by Anne Mitchell, Crazy Fish Realty.
F. Jeffrey Miller Update - October 20, 2009
A hearing was held in Topeka, Kansas in front of Judge Julie Robinson. Miller is currently being held pending his sentencing which is set for December 22nd, 2009 at 9:00 a.m.. Steve Vanatta and Hallie Irvin, Miller's codefendants, will be sentenced at that time also.
Several motions were heard this week. One was a motion for Miller to be released pending his sentencing. Miller's attorney, Jeff Morris, argued that the court had dismmissed with predjudice the matter involving Miller's purchase of a commercial lawnmower, violating the court ordered monitoring agreement. He also argued that Miller was not a flight risk and should be released. This motion was denied.
Another motion heard by Judge Robinson was that of an escrow account containing proceeds from the sale of Miller's forfeited assets. This account has a balance of $143,000. Attorney Morris argued that his firm was due $100,000 for work done in the Miller matter, to date. The government argued that his 'un-itemized fees' were 'exhorbitant'. The balance of the funds, Morris argued, should be released to the Miller family to help pay for mounting household expenses.
The government argued that the 'Asset Forfeiture Provision' applies down to 'the last penny' and that 'the rights of the victims to made whole are of paramount immportance' and that no routine household expenses like Visa bills, are allowed.
Attorney Morris argues that there is more than enough assets to satisfy the jury's judgement of $2.65 million dollars. The government argues that the estimated value of his assets are only $1.4 million.
The government also stated that Miller has been paid dividends from a company Miller has an ownership interest in; Boreflex. From July, 2008 to present, Miller has been paid $330,509.30 from Boreflex, unbeknownst to the court appointed monitor.
Present in the courtroom was Todd Earnshaw. Earnshaw was indicted along with Miller and others in what is commonly referred to as 'Miller I'. That trial is scheduled to begin on January 11, 2010 in Topeka, Kansas.
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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 
