Frederick Ugwu, 54, Upper Saddle River, N.J., a New Jersey real estate investor, was sentenced to 50 months in prison in connection with a mortgage fraud and property-flipping scheme involving rental properties in Paterson, New Jersey.
Ugwu was convicted in December 2009 after a five-week jury trial on counts of wire fraud, money laundering, and conspiracy to commit those offenses before U.S. District Judge Jose L. Linares. Judge Linares also imposed the sentence in Newark federal court.
According to documents filed in this case and statements made in court, Ugwu conspired with several others to sell two- and three-family rental properties to borrowers whose mortgage loans were obtained by fraud. Ugwu acquired distressed rental properties in Paterson cheaply, made basic or minimal repairs to them, and then sold them for several times more than he paid for them just weeks or months earlier. When selling these properties, he signed documents before and at the closings falsely representing that the borrowers had paid him tens of thousands in down payments and at the closings. In fact, the borrowers made no such payments. Ugwu also allowed hundreds of thousands of dollars in proceeds from some of the sales to go to his coconspirators while hiding many of those payments from the mortgage lenders.
In addition to the prison term, Judge Linares sentenced Ugwu to three years of supervised release and ordered him to pay $1,602,958.62 in restitution. Ugwu is also required to forfeit $1,753,212.06 in proceeds of the scheme, plus the contents of three different bank accounts that he used to deposit those proceeds.
Ugwu‘s case is part of an ongoing investigation by the U.S. Department of Housing and Urban Development Office of Inspector General (HUD-OIG), the FBI, the U.S. Postal Inspection Service, and IRS-Criminal Investigation into fraudulent Federal Housing Administration-insured and conventional mortgage loans originated by various New Jersey mortgage companies. The investigation has resulted in more than a dozen guilty pleas from current or former New Jersey residents, including:
Michael Eliasof, a former Paramus, N.J., real estate agent; Gerald Carti, a former loan officer and shareholder of U.S. Mortgage Corp.; Amer Mir, a former loan officer of United Home Mortgage Co.; Norman Barna, who, like Ugwu, sold numerous Paterson properties through the scheme; William Ottaviano, an appraiser; Renford Davis and Hopeton Bradley (now deceased), who jointly managed many of the Paterson properties involved in the scheme; Claribel Morrobel, a recruiter for the scheme; and Melanie Gebbia, the former legal assistant of William Colacino (now deceased), a former Garfield attorney and municipal court judge.
Mir was convicted at the 2009 trial for his role in the mortgage fraud scheme; his sentencing is scheduled for April 20, 2011. In addition, Judge Linares recently sentenced Corallo, Eliasof, Carti, and Ottaviano to 51 months, 40 months, 27 months, 15 months, and six months in prison, respectively, for their roles in the scheme, while Barna, Gebbia, and Morrobel each received probation.
U.S. Attorney Paul J. Fishman announced the sentence.
U.S. Attorney Fishman credited special agents of HUD-OIG, under the direction of Special Agent in Charge Joseph W. Clarke for the Mid-Atlantic region; special agents of the FBI, under the direction of Special Agent in Charge Michael B. Ward in Newark; inspectors of the U.S. Postal Inspection Service, under the direction of Acting Postal Inspector In Charge Thomas E. Boyle; and special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Victor W. Lessoff, for the investigation leading to the sentence.
The government is represented by Assistant U.S. Attorney Mark E. Coyne, Chief of the U.S. Attorney’s Office Appeals Division, and Assistant U.S. Attorney Matthew E. Beck of the U.S. Attorney’s Office Economic Crimes Unit in Newark.
Defense counsel: Henry E. Klingeman, Esq., Newark, N.J.