Archives For false information

George Gilmore, 70, Toms River, New Jersey, a partner at an Ocean County, New Jersey, law firm, was sentenced today to one year and one day in prison for his conviction on two counts of failing to pay over payroll taxes withheld from employees to the IRS and one count of making false statements on a bank loan application submitted to Ocean First Bank N.A.

According to documents filed in this case and the evidence at trial:

Gilmore worked as an equity partner and shareholder at Gilmore & Monahan P.A., a law firm in Toms River, New Jersey, where he exercised primary control over the firm’s financial affairs. Because he exercised significant control over the law firm’s financial affairs, Gilmore was responsible for withholding payroll taxes from the gross salary and wages of the law firm’s employees to cover individual income, Social Security and Medicare tax obligations. For the tax quarters ending March 31, 2016, and June 30, 2016, the law firm withheld tax payments from its employees’ checks, but Gilmore failed to pay over in full the payroll taxes due to the IRS.

Gilmore also submitted a loan application to Ocean First Bank containing false statements. On November 21, 2014, Gilmore reviewed, signed, and submitted to Ocean First Bank a Uniform Residential Loan Application (URLA) to obtain refinancing of a mortgage loan for $1.5 million with a “cash out” provision that provided Gilmore would obtain cash from the loan. On January 22, 2015, Gilmore submitted another URLA updating the initial application. Gilmore failed to disclose his outstanding 2013 tax liabilities and personal loans that he had obtained from others on the URLAs. Gilmore received $572,000 from the cash out portion of the loan.

On April 17, 2019, Gilmore was acquitted of two counts of filing false tax returns for calendar years 2013 and 2014; the jury could not reach a unanimous verdict on one count of income tax evasion for calendar years 2013, 2014, and 2015. The verdicts were returned following a trial that began April 1, 2019, before U.S. District Judge Anne E. Thompson, who imposed the sentence today in Trenton federal court.

In addition to the prison term, Judge Thompson sentenced Gilmore to three years of supervised release.

First Assistant U.S. Attorney Honig for the District of New Jersey and Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division credited special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge John R. Tafur, special agents with the U.S. Attorney’s Office under the direction of Supervisory Special Agent Thomas Mahoney, and special agents of the FBI Red Bank Resident Agency, under the direction of Special Agent in Charge Gregory W. Ehrie in Newark, with the investigation leading to today’s sentencing.

The government is represented by Deputy U.S. Attorney Matthew J. Skahill; Assistant U.S. Attorney Jihee G. Suh of the U.S. Attorney’s Office Special Prosecutions Division; and Trial Attorney Thomas F. Koelbl of the U.S. Department of Justice – Tax Division.

 

Robert Morgan, Frank Giacobbe, Todd Morgan, and Michael Tremiti, have been charged today in a 114-count superseding indictment charging them with conspiracy to commit wire fraud and bank fraud for their roles in a half billion dollar mortgage fraud scheme.

The defendants each face various additional charges such as wire and bank fraud, and money laundering. Todd Morgan and Robert Morgan are also charged with wire fraud conspiracy to defraud insurance companies. The charges carry a maximum penalty of 30 years in prison and a fine in the amount of double the loss caused by the crimes, which is currently estimated to exceed $25,000,000.

During the course of the conspiracy:

  • Robert Morgan was the managing member and chief executive officer of Morgan Management. In addition to his role with Morgan Management, he controlled and managed owned a substantial portfolio of real estate holdings;
    • Frank Giacobbe owned and operated Aurora Capital Advisors, identified himself as the Principal, and employed others to assist him in brokering, and attempting to broker real estate loans;
    • Todd Morgan was employed at Morgan Management, and worked as a Project Manager at the company; and
    • Michael Tremiti was employed at Morgan Management, and worked as Director of Finance for the company.

According to the superseding indictment, between 2007 and June 2017, the defendants conspired with Kevin Morgan, Patrick Ogiony, Scott Cresswell, and others to fraudulently obtain moneys, funds, credits, assets, securities, and other property from financial institutions such as Arbor Commercial Mortgage, LLC and Berkadia Commercial Mortgage, LLC, and government sponsored enterprises, including Federal Home Loan Mortgage Corporation (Freddie Mac), and the Federal National Mortgage Association (Fannie Mae).

The defendants provided false information to financial institutions and government sponsored enterprises overstating the incomes of properties owned by Morgan Management or certain principals of Morgan Management. The false information induced financial institutions to issue loans: (1) for greater values than the financial institutions would have authorized had they been provided with truthful information; and (2) that the financial institutions would not have issued at the time of issuance had they been provided with truthful information. These properties included:

  The Preserve at Autumn Ridge, Watertown, New York;
  The Eden Square Apartments, Cranberry Township, Pennsylvania;
  The Rochester Village Apartments at Park Place, Cranberry Township, Pennsylvania;
  The Reserve at Southpointe, Canonsburg, Pennsylvania;
  7100 South Shore Drive Apartments, Chicago, Illinois;
  The Avon Commons Apartments, Avon, New York;
  The Morgan Bay Apartments, Houston, Texas;
  Brookwood on the Green, Syracuse, New York;
  The Creek Hill Apartments, Rochester, New York;
  Hickory Hollow, Rochester, New York;
  The Knollwood Manor Apartments, Rochester, New York;
  The Links at Centerpointe, Canandaigua, New York;
  The Nineteen North Apartments, Pittsburgh, Pennsylvania;
  The Overlook at Golden Hills, Lexington, South Carolina;
  The Penbrooke Meadows Apartments, Rochester, New York;
  The Trails of North Hills Apartments, Raleigh, North Carolina;
  The Rivers Pointe Apartments, Syracuse, New York;
  The Union Square Apartments, Rochester, New York;
  The View at MacKenzi, York, Pennsylvania; and
  The Villas of Victor, Rochester, New York.

To facilitate the conspiracy:

  • Morgan Management provided property management, accounting, and financial reporting services for the properties owned by limited liability companies controlled by defendant Robert Morgan.
    • The defendants conspired to manipulate income and expenses for properties to meet debt service coverage ratios (“DSCRs”) required by lending institutions. The manipulation included, among other things, removing expenses from information reported to lenders and keeping two sets of books for at least 70 properties, with one set of books containing true and accurate figures and a second set of books containing manipulated figures to be provided to lenders in connection with servicing and re-financing loans.
    • The defendants conspired to present lending institutions with false and fraudulent inflated construction contracts and invoices that falsely reported to the lending institution that the contractor constructing a property was being paid more than the contractor was actually being paid.
    • The defendants provided false information to financial institutions and government sponsored enterprises that overstated net incomes of properties and thereby induced financial institutions to: (1) issue loans (a) for greater values than financial institutions would have authorized had they been provided with truthful information; and (b) that the financial institutions would not have issued at the time of issuance had they been provided with truthful information; and (2) forgo contractual rights that would have inured to the financial institutions had the defendants and Morgan Management presented accurate financial information to the financial institutions.
    • The defendants employed various mechanisms to mislead inspectors, appraisers, financial institutions and government sponsored enterprises with respect to the occupancy of properties.
    • The defendants falsely inflated the amounts owed on properties, by among other things, (1) providing false documentation of obligations purportedly associated with the properties, (2) misrepresenting the actual purchase prices of properties by providing false contracts and contract prices, and (3), as set forth above, presenting false construction contracts and invoices.

In the wire fraud conspiracy to defraud insurers, Todd Morgan and Robert Morgan are accused of conspiring with Kevin Morgan and Scott Cresswell to present false and inflated contracts and invoices for repairs to insurers after damages to properties in Robert Morgan’s real estate portfolio. These properties include the Summerwood Apartments, Merrillville, Indiana; the Eden Square Apartments, Cranberry Township, Pennsylvania; and at thirty-four properties in the Rochester, New York area after a March 2017 windstorm in that area.

The defendants are also charged with money laundering conspiracy for engaging in monetary transactions in excess of $10,000 using the proceeds of wire fraud and bank fraud.

The total loss sustained by financial institutions and government sponsored enterprises throughout the mortgage fraud scheme is currently estimated to exceed $25,000,000. The loss resulting from the insurance fraud scheme is currently estimated at approximately $3,000,000.

The defendants made an initial appearance before U.S. Magistrate Judge Michael J. Roemer and were released on conditions.
U.S. Attorney James P. Kennedy, Jr. made the announcement.

The charges announced today reflect this Office’s commitment to ensuring that those who do business with the mortgage, banking, and insurance industries act with honesty and integrity,” stated U.S. Attorney Kennedy. “The scope of the dishonesty and deceit alleged here—both in a geographic sense as well as in terms of the dollar value of the mortgages and properties involved—was expansive. This type of fraud strikes at the very heart of those industries, and I commend the FBI and the FHFA-OIG for the significant resources they devoted to this investigation in order to reveal the full scope of the illegal conduct alleged in this superseding indictment.

Today’s charges allege Robert Morgan-and the men he surrounded himself with in business-worked hard with a desire to creatively subvert the integrity of the financial industry,” said FBI Buffalo Special Agent-in-Charge Gary Loeffert. “In response, we worked just as hard and creatively to put a stop to it. We hope the indictment returned in this case helps to educate and protect the tens of thousands of investors who own mortgage-backed securities.”

Richard Parker, Acting Deputy Inspector General for Investigations for the Federal Housing Finance Agency, Office of Inspector General (FHFA-OIG), said, “the financing of multifamily loans is a significant segment of Fannie Mae’s and Freddie Mac’s portfolio.  As these charges demonstrate, FHFA-OIG will work with our partners in law enforcement to investigate and hold accountable those who seek to victimize the entities regulated by FHFA.”

Defendants Kevin Morgan and Patrick Ogiony were previously convicted of conspiracy to commit bank fraud, and defendant Scott Cresswell was previously convicted of conspiracy to commit wire fraud for their roles in the multi-million dollar fraud scheme. All three defendants are awaiting sentencing.

The superseding indictment is the result of an investigation by the Federal Bureau of Investigation, under the direction of Special Agent-in-Charge Gary Loeffert, and the Federal Housing Finance Agency, Office of Inspector

General, under the direction of Special Agent-in-Charge Robert Manchak, Northeast Region.

The fact that a defendant has been charged with a crime is merely an accusation and the defendant is presumed innocent until and unless proven guilty.