Nathan Russo, 35, Johnston, Rhode Island, was sentenced on January 20, 2012, by Chief United States District Judge Alvin W. Thompson in Hartford, Connecticut, to 30 months of imprisonment, followed by three years of supervised release, for his role in an extensive mortgage fraud scheme.
According to court documents and statements made in court, between February 2007 and April 2010, Syed Babar, New London, Connecticut, orchestrated a scheme to obtain millions of dollars in residential real estate loans, including loans insured by the Federal Housing Administration, through the use of sham sales contracts, false loan applications and fraudulent property appraisals. Russo was a mortgage broker employed by Action Mortgage Corp., a licensed mortgage broker in Cranston, R.I. Russo worked with Babar in brokering the loans, and he kicked back a portion of his mortgage broker fees to Babar as part of the fraudulent scheme.
In 2007, Russo acted as a mortgage broker for five residential properties, four of which were located in Connecticut, which were purchased by a straw buyer and co-conspirator. Russo prepared loan packages for these transactions, including loan applications for the buyer that he knew included false information about the buyer’s employment, assets and liabilities and the buyer’s intention to occupy the property as his principal residence. The loan applications also were supported by false documentation, including earning statements and fraudulent bank records. Contrary to Russo‘s representations in the loan applications, he failed to interview the straw purchaser of four of the five properties. In an attempt to make it harder for lenders to discover the fraud, Russo brokered these five loans and used a different lender for each loan.
On the applications for three of the houses, Russo failed to disclose to lenders that the straw buyer had purchased other properties, notwithstanding Russo‘s role as broker on them. For example, closings for two properties on Walnut Street, Willimantic, Connecticut, took place on the same date, June 29, 2007, and neither of Russo‘s applications disclosed the other loan being sought or the other property being purchased.
Babar and his co-conspirators conducted approximately 30 fraudulent mortgage transactions. As a result, various lenders suffered total losses of approximately $4.75 million.
Chief Judge Thompson ordered Russo to pay restitution in the amount of $1,157,753.25.
On January 6, 2011, Russo pleaded guilty to one count of conspiracy to commit wire fraud.
A total of 13 individuals, have been convicted in connection with the scheme.
As previously reported by Mortgage Fraud Blog, Syed Babar was sentenced to 120 months of imprisonment. Six other scheme participants have received prison terms ranging from 48 to 90 months.
David B. Fein, United States Attorney for the District of Connecticut, announced the sentence.
This case was investigated by the Federal Bureau of Investigation and the U.S. Department of Housing and Urban Development ““ Office of Inspector General, and is being prosecuted by Assistant United States Attorneys Eric J. Glover, Susan Wines and Liam Brennan.
Citizens are encouraged to report any suspected mortgage fraud activity by calling 203-333-3512 and requesting the Connecticut Mortgage Fraud Task Force, or by sending an email to email@example.com.
The Connecticut Mortgage Fraud Task Force includes representatives from the U.S. Attorney’s Office; Federal Bureau of Investigation; Internal Revenue Service ““ Criminal Investigation; U.S. Postal Inspection Service; U.S. Department of Housing and Urban Development, Office of Inspector General; Federal Deposit Insurance Corporation, Office of Inspector General, and State of Connecticut Department of Banking.
This case was brought in coordination with the President’s Financial Fraud Enforcement Task Force, which was established to wage an aggressive and coordinated effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
To report financial fraud crimes, and to learn more about the President’s Financial Fraud Enforcement Task Force, please visit www.stopfraud.gov.