Thursday, May 08, 2008

New Yorkers Net 2 Years For Loan Misreps

Matthew J. Kupic, 38, and Francis Thomas Disonell, 38, both of Clifton Park, New York, were sentenced before the Honorable Gary L. Sharpe in United States District Court in Albany, N.Y., for their participation in a mortgage and tax fraud scheme. Both defendants were sentenced to a term of imprisonment of 24 months. Judge Sharpe further ordered the defendants to pay restitution in the amount of $887,311.57 to the victim banks, and ordered that each defendant forfeit over $600,000 in the fraudulent mortgage proceeds that they obtained from the mortgage fraud scheme.

Nearly a year ago, in May 2007, Kupic and Disonell pled guilty and admitted their participation in a mortgage fraud scheme that took place between March 2000 and August 2003, in connection with their former businesses Team Title Abstractors and Real Estate Consultants, located on Route 9 in Clifton Park, New York. The defendants admitted that they knowingly and willfully executed a scheme to defraud banks and other mortgage lenders by arranging to secure excessive mortgages for numerous residential properties through the use of fraudulent loan applications and settlement statements, and by diverting mortgage funds for their personal use and to third parties. The defendants admitted that the scheme operated in the following manner:

Kupic and Disonell identified below-market real estate properties for sale by owner that were in need of substantial rehabilitation. They located buyers for the properties with promises of ownership of income-producing property and the promise of money back at closing for necessary repairs. In order to obtain funding for the purchases, Kupic and Disonell caused buyers to submit fraudulent loan applications to lenders which concealed the source of the buyers’ funds necessary for down payments and other associated closing costs. In some instances the defendants loaned buyers money to make the purchases and close, thereby creating buyer liabilities that were not disclosed in loan applications. In other instances, they deposited money into the bank accounts of buyers to increase the likelihood that lenders would approve the loan applications, and then withdrew the funds after the loans were approved.

As part of the scheme, sales contracts and other documents submitted to mortgage lenders contained forged signatures and other false statements. For some real estate transactions, Kupic and Disonell created and utilized “Repair Rebate Agreements” which identified future upgrades to the subject properties that purportedly were going to be completed by the buyers with loan proceeds. KUPIC and DISONELL knew these upgrades would never be completed and, in fact, they never were completed. Repair Rebate Agreements were merely a mechanism the defendants used to get loan funds to the buyer, themselves, and third parties without making any disclosure of the disbursements to the lenders.

Kupic and Disonell also arranged for multiple purchases with the same buyer, to take place close in time – often on the same day – so that subsequent lenders did not learn of the buyer’s recent loans and liabilities. These additional mortgage loans held by buyers were not disclosed to the lenders at the time of the subsequent closings, and the subject loan applications were not amended to include the buyers’ additional liabilities. In contrast to what was reported to lenders on the HUD-1 Settlement Statements and sales contracts associated with the loans, sellers received only the actual asking prices for properties, minus the amount used to pay off existing mortgages. Bogus checks to sellers, which matched the fraudulent sales amounts listed on fraudulent HUD-1s and sales contracts, were retained in the loan files for Kupic and Disonell to use as proof of payment for lenders. After paying sellers actual asking prices and after paying valid fees disclosed on HUD-1s, Kupic and Disonell fraudulently directed the settlement agent to disburse the remaining mortgage proceeds to themselves, to buyers, and to other third parties, in manners and in amounts not disclosed on the HUD-1 documents, in the sales contracts, or in any other manner to the lenders.

Through their mortgage fraud scheme, Kupic and Disonell obtained excessive mortgages totaling at least $3,641,640, in at least 54 real estate transactions, and diverted a total of approximately $1,983,013.16 of mortgage proceeds to themselves and others. Most of these mortgages were subsequently placed in foreclosure, resulting in substantial losses to various financial institutions and other lenders. Kupic and Disonell each personally received over $600,000 in fraudulent mortgage proceeds (in addition to funds diverted to Real Estate Consultants) which they failed to report as income on their federal income tax returns. 

mortgage fraud