Dr. Robert J. Rosenstein, 56, Cleveland, Ohio, was indicted one one count of conspiracy to commit bank fraud, false statements to influence a bank to make a loan, mail fraud, and wire fraud.
Rosenstein is charged as being a straw buyer for a co-conspirator, not charged in the information, referred to as “J.C.” The information defines a straw buyer as an individual who, usually for compensation or other benefit, would sign mortgage loan documents to conceal from the lending institution the fact that someone else, usually a person with poor credit, was going to be the de facto owner of the property and that the straw buyer, although he or she signed the mortgage application and note, had no intention of making mortgage payments or living in the mortgaged property as his or her residence.
The information charges that Rosenstein entered into an agreement with J.C, whereby J.C., through his various companies and entities, would make any and all mortgage payments for Rosenstein if he agreed to act as a straw buyer and sign applications, HUD-1 forms and other documents, used to secure mortgage loans using Rosenstein‘s credit to purchase properties located in Florida. J.C. also paid Rosenstein $25,000 as an inducement to fill out the paper work and to provide his credit to secure mortgage loans. Rosenstein, and J.C. agreed that J.C. would manage and/or develop the property to enhance its value, pay all expenses, including monthly mortgage loan payments, and, once the property was sold, they would split all profits equally.
The information further charges as part of the conspiracy, that Rosenstein executed false loan applications, HUD-1 forms and other documents for two mortgage loans totaling approximately $2.9 million to purchase properties located in the Panama City, Florida area. The mortgage loans were determined to be false based upon the following reasons: 1) The HUD-1 form indicated that Rosenstein would be responsible for the repayment of the loans by making scheduled, monthly payments to the banks when, in fact, based upon his agreement with J.C., Rosenstein, had no intention at the time he executed these documents to be personally responsible for these loans or to make monthly loan payments as required by the mortgage notes; 2) Rosenstein and J.C. indicated on HUD-1 forms that Rosenstein made down payments of approximately $181,767.00 to First Horizon Bank and approximately $44,787.00 to National City on the purchase of these properties, when, in fact, these down payments were never made; 3) J.C. and Rosenstein falsely inflated bank account balances, assets and income on mortgage loan applications in order to assure Rosenstein‘s approval for the loans; 4) The applications indicated that the properties were to be second residences for Rosenstein when, in fact, he never saw or had any plans to live in these properties. Rather, Rosenstein considered these transactions to be an investment and the properties were to be sold within a short period of time and the profits split with J.C., according to the charge.
According to the information, on or about May 2006, J.C. stopped paying the mortgage payments for his straw buyers, and the mortgage loans went into default and foreclosure, resulting in a loss, or charge off, of $811,087.00 for First Horizon Bank and $1,163,148.69 for National City Bank, for a total loss of $1,974,235.69.
The investigation is ongoing.
An information is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt. If convicted, the defendant’s sentence will be determined by the court after review of factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense and the characteristics of the violation. In all cases, the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.
Steven M. Dettelbach, United States Attorney for the Northern District of Ohio, announced the indictment.
The case is being prosecuted by Assistant U.S. Attorneys Christian H. Stickan, Mark S. Bennett, and Henry F. DeBaggis, following investigation by agents of the IRS-CI,
and FBI, Akron Office.