Thursday, April 24, 2003

Three Indicted in New Jersey Equity-Skimming Scheme

Three persons who allegedly participated in an “equity-skimming” scheme involving properties throughout New Jersey were indicted today on charges of diverting tens of thousands of dollars per month in rental income to their own use, rather than towards mortgage or tax payments, U.S. Attorney Christopher J. Christie announced.

Charged in a four-count federal Indictment, alleging conspiracy to commit equity skimming and mail fraud, were:

• Timothy Burke, 51, of Bridgeport, Connecticut, charged with conspiracy, equity skimming and two counts of mail fraud

• Paul Ligas, 42, of Lyndhurst, New Jersey charged with conspiracy, equity skimming, and two counts of mail fraud, and

• Renee Wilmot, 37, of Lyndhurst, New Jersey, charged with conspiracy, equity skimming and two counts of mail fraud

Count One of the Indictment alleges a conspiracy to commit equity skimming and mail fraud between 1993 and 1999. Conviction on that count carries a maximum penalty of five years in federal prison and a $250,000 fine.

Count Two alleges equity skimming, and counts three and four allege mail fraud, all during the period between 1993 and 1999. Conviction on each of those counts carries a maximum of five years in prison and a $250,000 fine.

The Indictment alleges that between 1993 and 1999, Burke and Ligas engaged in equity skimming, and that Wilmot joined them in 1996. Burke and Ligas owned and operated businesses named Lincoln Management, Franklin Properties and Tower Management (collectively “Lincoln Management") in carrying out their scheme. Wilmot was their office manager. All three businesses were located in Lyndhurst, initially at 63 Ridge Road and later at 219 Stuyvesant Ave.

Equity skimming is a name generally applied to a type of fraud that consists of the practice of purchasing residential properties whose owners are in default on their mortgages or their real estate taxes, and then diverting rental income from these properties for personal gain rather than applying this rental income toward mortgage payments, the payment of taxes and other property-related expenses.

The defendants told various homeowners in default that by selling their residences to Lincoln Management, that would wipe the slate clean and that Lincoln Management would take over all of the homeowners’ property-related debts and obligations.

The Indictment identifies eight specific properties acquired by Lincoln Management. They were located in Garfield, Hillside, West Orange, Newark, Plainfield, Ridgewood and Paterson, New Jersey. In each case, the original homeowner had defaulted on his/her mortgage loan or on his/her property tax payments.

After buying the properties from the homeowners, Lincoln Management diverted the rental income from these properties for the use of the defendants, but did not make the mortgage or tax payments owing on them.

In some cases, Lincoln Management collected rent from the very same homeowners from whom it had bought the property. The properties were eventually foreclosed upon by the banks that had made the original mortgage loans.

The Indictment alleges that over 168 properties were involved in Lincoln Management’s scheme. In the month of June 1998, for example, the total rental value of the properties then controlled by Lincoln Management was $82,000.

Various banks and federal agencies, such as HUD and Veterans Affairs, that had insured some of these mortgage loans sustained losses on the properties taken over by Lincoln Management. For example, HUD lost over $1.4 million on the Lincoln Management properties.

Despite having been indicted, every defendant is presumed innocent, unless and until found guilty beyond a reasonable doubt following a trial at which the defendant has all of the trial rights guaranteed by the U.S. Constitution and federal law.

mortgage fraud

1. This is my first blog ever. I have been looking in all the wrong places until now. I think I may be the one that started the whole investigation into these a$$holes. I moved back here back in 2000 (from Minnesota). I had just lost my last parent, my dad, and needed to abandon my dreams and return ‘home’ where my children were. I left a decent job at IBM/Mn. to try and make it here on the East coast, from scratch and with very very little in my savings (ha more like what was left over from my very last paycheck and income tax refund, no savings in my life span). I had to continue child support payments, pay rental space fees and still try to support myself and my dogs, along with my then girlfriend/ now wife, we both picked up odd jobs until something good would come through. I delivered pizzas and worked every day 7 days a week for close to 5 total months.
   When we arrived in New Jersey, we lived with my wife’s mother in her 1 bedroom appt with 2 dogs and 2 cats. I delivered pizzas from 10 am till 1am on tips only. Saving every dime we could, scrimping and saving for 2 months, my wife babysitting, cleaning houses, working at the PUB, we were able to afford a down payment on a property that was in a not so nice neighborhood (hey with my Rotti I wasn’t worried at all)but the house was big and the yard was fenced, it really was a nice fit for what we wanted to be located geographically. We found Paul Ligas in a newspaper ad describing this wonderful property. We went by and viewed the house with a ‘drive-by’ and looked in the windows as best we could. It had 2 floors and we could only view certain angles within the house. It looked dirty but manageable. I called the number in the paper and Paul said he was going to be showing the house a certain day and would meet us there. We arrived and waited and another man approached us and said he too was there to see the property. Paul was a no show. Discussing the availability or the lack there of, of housing in the area, the GF and I decided to beat his other guy and tell Paul we wanted it. When we called Paul (he said he apologised for the missed appointment he had another commitment), we agreed to drive to Lyndhurst and place a deposit of $1,000 and receive a key and sign a lease to us on this said house. We got back and of course I needed to work, when my GF called me crying saying she went to the house and found the upstairs was a mess. Holes in the walls, The kitchen cabinets were missing doors. Paint was lousy. She took pictures and her sister was with her. In the day to follow my Sister-in-law found out that the house didn’t have a COO. We tried to get our money back and Paul pulled a fast one again on us by requesting the key for the return of the $1,000. We sent it and he didn’t. We retained a lawyer and we received judgement on Paul but my Lawyer hit the road block and stopped representing us. Now after all this time another company stirred up the interest when they said they could get the money for us. Now armed with a computer and some knowledge, I see this a$$hole was indicted. Me and the Mrs are still together and we pulled our hard work and ‘do-good’ attitude and are about to get out of debt and buy our first house. I could really use the judgement money, but feel it’s a lost cause. A marriage that will be counted as a lost and a lesson learned. I feel the New Jersey Bar Ass. should look into the a$$hole lawyer that left us hanging for years of neglect and non performance. If I was like that at my current job I would be let go in an instant. This guy fed us full of dreams and wishes and failed to ‘work’ for me. I hope Paul didn’t have his trial yet cause I will be there to hear his defense and give my 2 cents. Wow that felt good to get that off my chest. I would love to hear comments and or suggestions to any of the questions I posed, or just to vent too (if it happened to you as well). Thanks… Joe

   Posted by  on  07/21  at  07:53 PM

2. looking for Paul myself. Heard he was sentenced to four years through friends.  Really a nice guy but always wanted to make a quick buck fast without doing much work.  He is smart and should have used his talents elsewhere.  He always believed the wrong people.  I feel sorry for his wife and children who stuck my him for years.  He fooled me once, but never twice......

   Posted by  on  08/11  at  03:52 PM