Martin Gendel, Montville, New Jersey, a disbarred lawyer, and his son, Seth Gendel, New York City, New York, as well as their companies Casey Properties and Lee Alan LLP, were sued in a lawsuit by New Jersey Attorney General Anne Milgram for violating New Jersey’s Civil Racketeer Influenced and Corrupt Organizations (RICO) statute.
The suit charges the Gendels, along with six other defendants, with using deception — and the credit information of their unwitting victims – to obtain fraudulent mortgage loans and turn a profit via the sale of urban properties at grossly inflated prices. Casey Properties basically duped its victims into buying homes in Newark, Paterson, Irvington and East Orange, New Jersey that were the subject of bogus appraisals, then profited by taking fees out at closing from the inflated equity.
The defendants told investors Casey Properties would take care of all aspects of the sale, as well as property management — including finding tenants, collecting rents, paying the mortgages and making needed repairs. However, Casey never did maintain the homes or keep up the mortgage payments. In the end, victims had their credit ruined and were left responsible for dilapidated homes that had been foreclosed on and abandoned. At the same time, the municipalities were left to deal with dozens of nuisance properties. In some cases, tenants were left to live in squalor, without utilities, as conditions deteriorated and properties fell into foreclosure. Some renters ended up homeless when their houses were declared uninhabitable.
Altogether, Casey Properties is accused of persuading at least 32 investors to buy 63 properties that sold for a total of $18 million.
In the Casey Properties lawsuit, the state also asks that defendants be ordered to pay to repair or rehabilitate buildings that were allowed to deteriorate, and reimburse the cities of Newark, Paterson, Irvington and East Orange, as well as the state, for costs incurred in dealing with the dilapidation and foreclosure. The state also asks that the defendants pay “reasonable expenses” associated with relocating displaced tenants to clean, safe housing.
In addition to the Gendels, defendants include Francis T. “Frank” Memmo, Medford, a mortgage solicitor; Kelly Kotzker, Evesham, a loan processor; Damien Figueroa, Oak Ridge, an attorney who acted as a closing agent for both Casey Properties and the Gendels‘ victims; Edward Evans, Fair Lawn, an attorney who also acted as a closing agent; Nicholas Manzi, Totowa, an attorney who acted as a closing agent, and Robert B. “Barry” McBriar, a real estate appraiser who surrendered his license in October 2008 in connection with the conduct charged in the lawsuit.
As previously reported, the Casey Properties lawsuit charges defendants with a “pattern of racketeering activity” as defined by the New Jersey civil RICO statute.
Included in the civil RICO count are such predicate acts as theft by deception, falsifying records and issuing false financial statements, as well as accepting commissions on phony mortgage loans, forging documents and collecting rent monies that were to go toward mortgage payments, but keeping the funds instead.
Other charges in the Casey Properties suit include violating the Consumer Fraud Act by making false promises and engaging in unconscionable commercial practices. The complaint also includes a charge of creating and maintaining a nuisance by operating a scheme that resulted in dozens of run-down and uninhabitable properties, including many damaged by fire and/or flooding.