Monday, July 10, 2006

Six Indicted in New York Mortgage Fraud Scheme Include Former Haitian Military Leader

A Grand Jury in Suffolk County, New York returned an indictment charging six individuals with Grand Larceny in the First Degree and other crimes stemming from two separate real estate transactions involving a four-bedroom house located in the Town of East Setauket on Long Island’s North Shore.

The indictment charges Frank DeGrasse, 45, South Salem, New York and Andreas Perdikos, 41, a fugitive, with stealing $750,000 from Sun Trust Mortgage Bank and Freemont Investment and Loan by pretending to sell the property on two separate occasions to “straw buyers;” individuals who purported to be bona-fide purchasers but who, as part of a scheme, lent their name and credit history to the defendants in return for financial gain.

In addition, Denise Smith, 45, Hempstead, New York and Gerard Felix, 42, Orange, New Jersey, are charged for their roles in recruiting and managing the straw-buyers, for which they were paid from the stolen loan proceeds. Another defendant, Lincoln Esteves, 33, Newark, New Jersey is an out-of-state mortgage broker who allegedly helped funnel the second transaction through Sun Trust Mortgage Bank.

It is alleged that, after selling the house in November 2004 for $870,000, and stealing over $750,000 in mortgage loan proceeds from Freemont Investment and Loan, Perdikos orchestrated a second deal with DeGrasses’ assistance, just 11 months later, for $1.3 million. This transaction was advanced by falsely inflating the value of the home by over $500,000 through a forged appraisal done by Perdikos. This fraudulent appraisal, along with numerous other falsified documents, and bank statements, was used to secure the new mortgage.

Emmanuel Constant, 49, Brooklyn, New York allegedly played a critical role in recruiting the second straw buyer and in forging the bank statement that was used to fool the bank into giving the loan. For his role in the conspiracy, Constant was allegedly paid $45,000.  Constant is the former leader of the Front for the Advancement and Progress of Haiti, which is accused of slaughtering masses of supporters of former Haitian President Jean-Bertrand Aristide.  In 1994, Constant was convicted in Haiti in absentia of the slaughter of Aristide loyalists and sentenced to a life sentence.  He has bee allowed to remain in New York since 1995, despite a deportation order, due to concerns that he would not be treated fairly in Haiti because of its unstable political climate.

It is further alleged that DeGrasse appeared as the legal counsel to the bank at both of the closings, breached his fiduciary duty, and was a co-conspirator who had full-knowledge of the scheme.

During the first sale, DeGrasse misappropriated the bank’s loan money, which had been transmitted to his attorney escrow account for the purposes of paying Perdikos. Degrasse used over $100,000 of this money to misrepresent the ability of the “straw buyers” to pay the balance at the closing. In reality, the straw buyer paid nothing, and the funds were re-deposited the next day into DeGrasse’s account and then used to pay the co-conspirators.

Perdikos, the properties’ true owner, remained in residence and pocketed hundreds of thousands of dollars from the bogus transaction. DeGrasse falsified documents submitted to both banks that included false statements, hid the identities of the true owner and the accomplices and misrepresented how the bank’s funds were paid at the time of closing.

The indictment, and bail applications were unsealed on July 6, 2006 by the Honorable Michael Mullin in Supreme Court, Suffolk County. Justice Mullin scheduled arraignments for July 6 and 7.

mortgage fraud