Tuesday, July 31, 2007

New York Attorney Indicted for Subprime Mortgage Fraud Scheme

Alexander Kaplan, Brooklyn, New York, was arrested on charges of participating in a multimillion-dollar sub-prime mortgage fraud scheme. The allegations against Kaplan relate to charges contained in a superseding Indictment, unsealed in Manhattan federal court, charging 26 other individuals with participating in a wide-ranging scheme to commit mortgage fraud by submitting to sub-prime lenders loan applications and supporting documents that contained false information and material omissions. The applications and documents included false information about the prospective borrower’s employment, income, and intent to reside in the property in question, as well as the fair market value of the property, and were intended to induce the sub-prime lenders to make loans that otherwise would not have been funded.

According to the Complaint against Kaplan:

Kaplan participated in a scheme to commit mortgage fraud in the purchase of a block of ten rent-regulated condominium apartments at 243 West 98 Street ("the Apartments") in the Upper West Side, Manhattan. On two separate days in January 2006, Kaplan served as the attorney for the buyers and the lenders in the closings of the Apartments. Kaplan conspired with others to obtain mortgages, based on false statements and material omissions, to finance the purchase of the Apartments.

Specifically, with respect to seven of the ten Apartments, certain sub-prime 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 the remaining three Apartments, certain sub-prime

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 sub-prime 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. In addition, the sellers and the buyers were all related in some respect -either by blood or by marriage—to each other. None of the sub-prime lenders were informed of the fact that the sale was not

an “arms-length” transaction.

As attorney for the buyers and the lenders, Kaplan attended the closings, and submitted to the lenders signed and completed documents, including loan application documents, on which the buyers indicated whether the property was to be a “primary residence” or an “investment property,” as well as other documents that reflected whether the buyer intended to occupy the property.

If convicted, Kaplan faces a maximum sentence of thirty years in jail and the greater of a $250,000 fine or twice the gross gain or loss resulting from the crime.

mortgage fraud

1. If you dig further in fraud cases, you’ll find out that there are more people involved but never indicted. Sometimes appraisers,agents and even bankers get involve in lending fraud.

   Posted by  on  08/01  at  09:29 PM

2. Behind most every mortgage fraud scam is an attorney and title company who turn a blind eye (at best) or who are active in aiding and abetting the crime. They should all be prosecuted.

   Posted by  on  08/08  at  04:01 AM