Mortgage Fraud Kingpen Sentenced

Allison Tussey —  December 12, 2011 — Leave a comment

James Robert Sweet, 44, Westbury, New York, the kingpin of the largest mortgage fraud and identity theft ring in Nassau County, New York, history has been sentenced to four to 12 years in prison for his role in leading an organization that stole more than $20 million from homeowners, banks, and the County government.

The defendant pleaded guilty October 6, 2011, to Enterprise Corruption under New York’s Organized Crime Control Act*, two counts of Grand Larceny in the First Degree, Money Laundering in the First Degree, 32 counts of Grand Larceny in the Second Degree, seven counts of Money Laundering in the Second Degree, five counts of Money Laundering in the Third Degree, six counts of Identity Theft in the First Degree, Money Laundering in the Fourth Degree, Scheme to Defraud in the First Degree, Conspiracy in the Fourth Degree, and 30 counts of Falsifying Business Records in the First Degree.

Sweet was also ordered to pay more than $1.2 million in restitution to lending institutions.

The investigation dubbed “Operation: Sweet Deal,” uncovered the largest mortgage fraud case in Nassau County history, with 17 defendants committing more than 45 independent acts of fraud including enterprise corruption, first-degree grand larceny, money laundering, identity theft, and conspiracy. The ring, which stole more than $20 million in property and stolen mortgage proceeds over six years, was led by Sweet and Dwayne Benjamin, 44, Westbury, New York.

Benjamin pleaded guilty to multiple felony charges October 5 and will be sentenced December 15, 2011.

Initially, the scammers used straw buyers who were convinced by Sweet and his members to purchase properties in Nassau County using their own personal information. Sweet told some of the straw buyers that they would be assisting sellers who were trying to sell their homes from foreclosure and/or that the homes would be a good investment opportunity. But the straw buyers were actually assisting in helping the Sweet Deal members to successfully perform their mortgage fraud schemes. Sweet Deal would typically pay their straw buyers $10,000 for the use of their name and personal information.

Members of Sweet Deal identified homes which were either already for sale or in distress. The key to the scam was that, unlike in a normal home purchase, Sweet Deal negotiated with the sellers to purchase the properties at a higher price than the seller was asking. As part of the deal, Sweet Deal arranged to keep the difference between the total amount lent by the bank and what the seller wanted as profit.

The scam worked because Sweet Deal members never intended to make any payments on the properties; they only intended to walk away with the profit. Most of the homes ended up in foreclosure.

In one case, Sweet Deal actually purchased the same house twice in a two-week period. On November 28, 2005, a Sweet Deal straw buyer took out a $390,000 mortgage to pay for a West Hempstead home. Sweet Deal members then took advantage of a delay in the filing of paperwork in the Nassau County Clerk’s Office, quickly “purchasing” the home again through a different straw buyer with a second $390,000 mortgage on December 16, 2005, while the official paperwork still listed the original homeowner.

By doing this, Sweet Deal members were able to take out two $390,000 mortgages, using the cash from the first to pay off the original owners’ outstanding mortgage, and keeping the entirety of the second. After closing costs, Sweet Deal members walked away with more than $361,000. The house eventually went into foreclosure.

Soon, however, the group began to branch out into more lucrative thefts by recruiting friends, family members, and co-workers to steal the identities of home buyers and property owners and to impersonate them at the closings.

Using these stolen identities, Sweet Deal members could impersonate both the home buyer and seller, and keep all of the proceeds of the phony home sale. In other words, using a stolen identity, Sweet Deal imposters would secure a real mortgage. At the closing, another Sweet Deal member would act as the home owner, using a stolen identity of the real home owner.

Once Sweet Deal members had stolen the mortgage proceeds, they had no reason to keep making mortgage payments and they let the property fall into foreclosure.

Using this scheme, organization members were able to steal the entire proceeds of at least six home sales in the Westbury, New York, area.

In order to accomplish this, Sweet Deal recruited individuals to impersonate the seller and buyer, whose identities had been stolen. Sweet Deal also assigned a member of Sweet Deal to impersonate a paralegal and also stole an attorney’s identity to set up a bank account to launder money through.

Another scheme involved defrauding Nassau County government by renting some of the properties they had purchased through straw buyers before and during foreclosure proceedings. Some of the tenants qualified for low-income subsidies offered by Nassau County government programs. However, the programs would only issue the subsidy checks to the owners of record.

Since the properties were held in the straw buyers’ names, members of Sweet Deal would not be able to collect the rent. Therefore, in order to collect the subsidies, several members of Sweet Deal submitted fake deeds to the program, indicating that they owned the properties, and stole more than $80,000 in undeserved subsidies.

Nassau County District Attorney Kathleen Rice announced the sentence.

The investigation was conducted by the DA’s Crimes Against Real Estate Unit with significant investigative assistance from the New York State Banking Department. Among those arrested are lawyers, mortgage brokers, real estate brokers, bank employees, an appraiser, a financial consultant and one United States Postal worker.

“James Robert Sweet and his cohorts thought nothing of wreaking havoc with the finances of innocent people, damaging communities by allowing homes to fall into foreclosure, and contributing to the economic distress of Nassau County,” Rice said. “Thanks to the meticulous and thorough work performed by prosecutors and investigators, we were able to tear down Sweet’s $20 million house of cards and put him behind bars.”

Assistant District Attorney Abigail Margulies, Chief of the Crimes Against Real Estate Unit, is prosecuting the case for the District Attorney’s Office. Sweet is represented by Martin Geduldig, Esq.

Rice also thanked the New York State Banking Department, the Westchester and Kings County District Attorney’s Offices, the U.S. Postal investigators and the New York State Department of Motor Vehicles for their involvement in the investigation.

*The Organized Crime Control Act (OCCA), the New York State counterpart of the federal Racketeer-Influenced and Corrupt Organizations (RICO) statute, which permits prosecutors to deal with criminal groups on an enterprise-wide basis rather than pursue isolated instances of criminal conduct. Using this law also provides for potentially higher sentences to be imposed. This is the first time in Nassau County history that OCCA has been used to prosecute mortgage fraud.

Allison Tussey

Posts Google+

No Comments

Be the first to start the conversation.

Leave a Reply

Text formatting is available via select HTML.

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>