Archives For New Jersey

Victor Santos, a/k/a “Vitor Santos,” 58, Wachtung, New Jersey; Arsenio Santos, a/k/a “Gaspar Santos,” 51, Warren, New Jersey; and Fausto Simoes, 65, Millington, New Jersey were arraigned today on multiple charges in connection with their alleged roles in a mortgage fraud scheme.

The three were charged on Sept. 24, 2018, in a 19-count indictment. They were each charged with one count of conspiring to commit bank fraud. Victor Santos was charged with nine counts of bank fraud and nine counts of making false statements in an application for credit. Arsenio Santos was charged with four counts of bank fraud and four counts of making false statements in an application for credit. Simoes was charged with seven counts of bank fraud and seven counts of making false statements in an application for credit.

According to documents filed in this case:

From September 2007 through November 2008, Victor Santos, a real estate investor; Arsenio Santos, a builder; and Simoes, a real estate settlement attorney, and others allegedly conspired to fraudulently obtain mortgage loans with a total value of more than $4 million.

Victor Santos, Arsenio Santos, and their conspirators allegedly recruited “straw buyers”, individuals who purchase a property for another in order to conceal the identity of the actual purchaser, usually in exchange for a fee, to purchase properties in Newark, New Jersey.

In exchange for the use of the straw buyers’ identity and credit history, Victor Santos, Arsenio Santos, and others allegedly agreed to pay each of the straw buyers a fee of at least $5,000, provide the straw buyer’s down payment and cash required for closing, secure tenants to lease the purchased property, and make the mortgage payments on each of the fraudulently obtained mortgages. These secret agreements were not disclosed to the bank. Shortly after the properties were acquired the mortgages went into default.

For the three representative schemes highlighted in the indictment, Victor Santos, Arsenio Santos, and their conspirators prepared and submitted mortgage applications containing false information to the bank and obtained loans totaling more than $1.3 million. The conspirators allegedly arranged transactions for the Newark properties whereby the straw buyers would nominally purchase the properties for far more than the sellers had agreed to sell them, and the conspirators diverted excess loan proceeds for their own benefit and to further the conspiracy.

Simoes was the closing attorney on approximately 10 of the fraudulent transactions and signed and certified the final settlement statements. These statements falsely stated that the cash required for closing for each transaction came from the straw buyer. In fact, Victor Santos and his conspirators provided those funds to Simoes and the funds were deposited into Simoes’ attorney trust account. For certain transactions, a shell company – whose bank account was controlled by Victor Santos and a conspirator – and to which funds from fraudulently obtained mortgage loans were disbursed – was the source of the cashier’s checks given to Simoes to fund the straw buyer’s cash required at closing. For other transactions, down payments came from an account owned and controlled by Arsenio Santos or from the proceeds of a previously obtained fraudulent loan.

The conspiracy to commit bank fraud count, the bank fraud counts, and the false statement counts, each carry a maximum potential penalty of 30 years in prison, a fine of $1 million or twice the gross gain to the defendants or twice the gross loss to others whichever is greater.

The announcement was made by U.S. Attorney Craig Carpenito.

U.S. Attorney Carpenito credited special agents of the Federal Housing Finance Agency, Office of Inspector General, under the direction of Acting Special Agent in Charge Robert Manchak, and special agents of the FBI, under the direction of Special Agent in Charge Gregory W. Ehrie of the Newark office, with the investigation leading to the charges.

The government is represented by Special Assistant U.S. Attorneys Charlie Divine and Kevin DiGregory of the U.S. Attorney’s Office’s Economic Crimes Unit in Newark and the Federal Housing Finance Agency, Office of Inspector General.

Christopher Goodson, 45, Newark, New Jersey, an attorney,  admitted today to running a large-scale mortgage fraud scheme that involved properties in Jersey City, Clifton, Union, and elsewhere in New Jersey and caused losses of millions of dollars.

Goodson pleaded guilty before U.S. District Judge Katharine S. Hayden in Newark federal court to an information charging him with one count of conspiracy to commit bank fraud.

According to the documents filed in this case and statements made in court:

From January 2011 through August 2017, Goodson, his co-defendant, Anthony Garvin, and others engaged in a short sale mortgage fraud conspiracy targeting various New Jersey properties with mortgages that were in default.   http://www.mortgagefraudblog.com/?s=Christopher+Goodson

The conspirators arranged simultaneous fraudulent transactions on the same target property. In the first transaction, which involved the sale by the current owner, the conspirators convinced the financial institution holding the mortgage to accept the sale of the target property at a loss, usually to a buyer who was secretly a conspirator or an entity controlled by the conspiracy.

In the second transaction, the conspirators flipped the same target property from the first buyer to a second buyer, who typically obtained a mortgage from another financial institution using false loan applications, pay stubs, bank account statements and title reports provided by members of the conspiracy. As a result, the second transaction frequently closed for significantly more or even double the price of the first transaction.

Goodson admitted that he, Garvin, and others rigged the short sale process at each step in order to maximize the difference in price between the two transactions and keep the victim financial institutions from detecting the fraud.

For instance, Goodson concealed the fact that he played multiple roles in the short sale transactions, including allegedly generating false pre-approval letters from a New Jersey corporation he owned that purported to be a short-term lending company operating out of California. These letters were used to deceive banks into believing that the purchaser – typically a conspirator or entity controlled by Goodson – had the credit necessary for the transaction. Goodson also negotiated the fraudulent short sales with the banks, generated phony deeds that backdated the closing date of the first transactions, and even served as the closing attorney during some of the short sales.

Garvin was a real estate agent and investor who allegedly coordinated fraudulent transactions as part of the scheme. The charge against him remains pending; he is considered innocent unless and until proven guilty.

The conspirators disbursed the funds into various accounts they controlled to conceal their illegal activities and split the profits. In total, the conspiracy defrauded financial institutions out of millions of dollars.

The conspiracy to commit bank fraud count is punishable by a maximum potential penalty of 30 years in prison and a $1 million fine. Sentencing is scheduled for January 29, 2019.

U.S. Attorney Craig Carpenito made the announcement.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Gregory Ehrie in Newark, postal inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge James V. Buthorn, and special agents of the Federal Housing Finance Agency (FHFA) – Office of Inspector General, under the direction of Special Agent in Charge Steven Perez in Newark, with the investigation

The government is represented by Assistant U.S. Attorneys David Feder and Zach Intrater, Executive Assistant to the U.S. Attorney, in Newark.

Defense counsel: John C. Whipple Esq., Morristown, New Jersey

 

Hasan Hussain, 57, Princeton, New Jersey, who was previously convicted in federal court and incarcerated for masterminding a real estate fraud scheme, pleaded guilty on Friday to charges that he again conspired to defraud financially distressed homeowners, investors, and financial institutions of fees, rental income, mortgage payment funds, property ownership and/or proceeds from the sale of their properties.

At the time of his guilty plea to the most recent federal indictment, Hussain admitted to using various business entities to trick distressed property owners, who were seeking loan modifications, into paying him fees, moving out of their homes, and selling their homes in short sale transactions.  As part of the plea, Hussain further admitted that he convinced lenders to agree to artificially low sale prices for the distressed property owners’ homes by directing other individuals to damage the properties prior to the short sales. Thereby, Hussain, or individuals or businesses associated with him, acquired the properties at reduced prices, and then flipped them to investors at much higher prices.  During his change of plea, Hussain admitted that these investors were defrauded of their funds, or good credit, or both when they agreed to purchase properties from Hussain.

Hussain further admitted that he assisted investors to acquire federally backed mortgages through fraudulent applications, ultimately resulting in losses to the lenders or the Federal Housing Administration.  Some of the tactics employed by Hussain as part of the scheme included misuse of identities and cutting and pasting signatures on property deeds and financial documents.

As part of his plea agreement, Hussain admitted that his scheme resulted in losses between $550,000 and $1.5 million dollars; that ten or more victims were harmed; and that at least some of his victims were particularly vulnerable, as a result of their personal situation.  The plea agreement also provided that the government would seek a leadership enhancement for Hussain given the extensive nature of the scheme and his role in it.

Hussain also pled guilty to aggravated identity theft in connection with the scheme.

At sentencing on January 8, 2018, Hussain faces up to 32 years in federal prison, 5 years of supervised release, and a fine of $1,250,000.

A co-defendant in this matter, Ricardo Abreu, who pled guilty earlier this year is scheduled to be sentenced on October 30, 2018.

Hussain’s guilty plea before U.S. District Court Judge John J. McConnell, Jr., is announced by United States Attorney Stephen G. Dambruch; Christina D. Scaringi, Special Agent in Charge of the Northeast Region of the U.S. Department of Housing and Urban Development Office of Inspector General; Brian Deck, Resident Agent in Charge of the Providence Office of the U.S. Secret Service; Harold H. Shaw, Special Agent in Charge of the Boston Division of the FBI; and Colonel Ann C. Assumpico, Superintendent of the Rhode Island State Police.

The case is being prosecuted by Assistant U.S. Attorneys Sandra R. Hebert and Richard B. Myrus.

Michael Arroyo, 60, Bronx, New York, and Rafael Popoteur, 67, Ridgefield Park, New Jersey,  a New York real estate broker and a Bergen County, New Jersey, homeowner were sentenced today for their respective roles in a $3.5 million scheme to use false information and simultaneous loan applications at multiple banks to fraudulently obtain home equity lines of credit, a practice known as “shotgunning”.

According to documents filed in the case and statements made in court:

From 2012 through January 2014, Arroyo and others conspired to fraudulently obtain multiple home equity lines of credit (HELOCs) from banks on residential properties in New Jersey and New York, including a residential property on Havermeyer Avenue, Bronx, New York. In 2013, Arroyo and others transferred ownership of the property to an individual living at the property and his family friend.

Arroyo and others then applied, in the family friend’s name, for two HELOCs from two banks using the Havermeyer Avenue property as collateral. They hid from the lenders the fact that the property was either already subject to senior liens that had not yet been recorded, or that the same property was offered as collateral for a line of credit from another lender. The applications also falsely inflated the family friend’s income without his knowledge. In addition, the equity in the property was far less than the amount of the HELOC loans that Arroyo and others applied for.

The victim banks eventually issued loans to the family friend in excess of $500,000. After the victim banks deposited money into the family friend’s bank accounts, portions of the funds were disbursed to Arroyo and others. Eventually, the family friend defaulted on the two HELOC loans.

Popoteur was a client of Arroyo and another broker. From 2012 through January 2014, Popoteur and the two real estate brokers, and others, conspired to fraudulently obtain multiple HELOCs from banks on a residential property in New Jersey. To get the banks to extend lines of credit they would not have otherwise approved, Popoteur and the real estate brokers executed a quitclaim deed to transfer ownership of a Ridgefield Park, New Jersey property to Popoteur, who also lived at the property.

Popoteur and the real estate brokers then applied for three HELOCs from multiple banks using the Ridgefield Park, New Jersey property as collateral. As the conspirators had done previously, they hid from the lenders the fact that the properties offered as collateral were either already subject to senior liens that had not yet been recorded, or that the same property was offered as collateral for a line of credit from another lender. The applications also contained false information concerning Popoteur’s income, which was stated to be higher than his actual income.  At the time the applications were made, the value of the Ridgefield Park, New Jersey property that was unencumbered by a mortgage was far less than the amount of the HELOC loans Popoteur and the others applied for.

The victim banks eventually issued loans to Popoteur in excess of $495,000.  After the victim banks funded the HELOCs and deposited money into Popoteur’s bank accounts, Popoteur disbursed portions of it to the real estate brokers and others. In 2014, Popoteur defaulted on all three HELOC loans. http://www.mortgagefraudblog.com/?s=Rafael+Popoteur

The overall scheme resulted in $3.5 million in losses to the victim banks.

Arroyo was sentenced to 21 months in prison. He previously pleaded guilty before U.S. District Judge John Michael Vazquez in Newark federal court to an information charging him with conspiracy to commit bank fraud.

Popoteur was sentenced to three years of supervised release, including one year of house arrest. He previously pleaded guilty before Judge Vazquez to an information charging him with conspiracy to commit bank fraud.

In addition to the prison term, Judge Vazquez sentenced Arroyo five years of supervised release.

U.S. Attorney Craig Carpenito made the announcement.

U.S. Attorney Carpenito credited special agents of the Federal Housing Finance Agency (FHFA) Office of Inspector General, under the direction of Special Agent in Charge Steven Perez in Newark, and special agents of the FBI, under the direction of Special Agent in Charge Gregory W. Ehrie in Newark, with the investigation leading to today’s sentencings.

The government is represented by Assistant U.S. Attorney Jason S. Gould of the U.S. Attorney’s Office Criminal Division in Newark and Special Assistant U.S. Attorney Kevin DiGregory of the FHFA, Office of the Inspector General.

 

IRVINE, Calif.–(BUSINESS WIRE)–CoreLogic® (NYSE: CLGX), a leading global property information, analytics and data-enabled solutions provider, today released its latest Mortgage Fraud Report. The report shows a 12.4 percent year-over-year increase in fraud risk at the end of the second quarter, as measured by the CoreLogic Mortgage Application Fraud Risk Index.

Source: CoreLogic Reports a 12.4 Percent Year-over-Year Increase in Mortgage Fraud Risk for the Second Quarter of 2018 | Business Wire

Joseph DiValli, Jackson, New Jersey, was sentenced today to 18 months in prison for his role in a large-scale mortgage fraud scheme that used phony documents and straw buyers to acquire more than $6 million in loans.

According to documents filed in this case and statements made in court: http://www.mortgagefraudblog.com/?s=Joseph+DiValli+

From March 2011 through November 2012, DiValli and other conspirators agreed to fraudulently obtain mortgage loans for properties located in North Jersey, New Jersey. After recruiting “straw buyers” to purchase the properties, DiValli and others submitted false and fraudulent loan applications and supporting documents so the straw buyers could qualify for the loans. DiValli and others also used another conspirator, who worked at a bank, to create misleading certifications showing certain bank accounts held more money than they actually had. DiValli and other conspirators also submitted false appraisal reports, backdated deeds and used unlicensed title agents to close transactions and disburse the mortgage proceeds.

As a loan officer for a North Jersey mortgage lender, DiValli facilitated some of these fraudulent transactions, including a $244,855.26 mortgage on a property located on Smith Street, Elizabeth, New Jersey. Overall, the scheme induced lenders to issue more than $6 million in loans, resulting in several defaults and exposing lenders and the Federal Housing Administration (FHA) to more than $2 million in potential losses.

DiValli also admitted using a separate scheme to modify the mortgage on his personal residence. From March 2011 through June 2012, Divalli used false payroll ledgers and earnings statements to deceive a loan officer into believing that his net earnings were lower than his actual income level.

DiValli also admitted receiving income of more than $450,000 in 2012. In order to avoid taxes of $79,000, DiValli failed to file taxes for 2012 and cashed his paychecks at a check-cashing facility to conceal his income.

DiValli previously pleaded guilty before U.S. District Judge Susan D. Wigenton to a superseding information charging him with one count of conspiracy to commit wire fraud, one count of wire fraud and one count of tax evasion. Judge Wigenton imposed the sentence today in Newark federal court.

In addition to the prison term, Judge Wigenton sentenced DiValli to three years of supervised release and ordered to pay restitution of $2,322,045.

U.S. Attorney Craig Carpenito made the announcement and credited law enforcement agents of the FBI Newark Mortgage Fraud Task Force, under the direction of Special Agent in Charge Gregory W. Ehrie; postal inspectors of the U.S. Postal Inspection Service, under the direction of Acting Inspector in Charge Ruth M. Mendonca; special agents of the U.S. Department of Housing and Urban Development, Office of Inspector General, under the direction of Special Agent in Charge Christina Scaringi; special agents of the Federal Housing Finance Agency, Office of Inspector General, under the direction of Special Agent in Charge Steven Perez; special agents of the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), under the direction of Special Inspector General Christy Goldsmith Romero; special agents of IRS–Criminal Investigation, under the direction of Acting Special Agent in Charge Bryant Jackson; and the Hudson County Prosecutor’s Office, under the direction of Prosecutor Esther Suarez, for the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorneys Lakshmi Srinivasan Herman of the National Security Unit, Andrew Kogan of the Cyber Unit, and Senior Litigation Counsel Barbara Ward of the Asset Recovery and Money Laundering Unit.

Defense counsel: Michael A. Koribanics Esq. Clifton, New Jersey.

Betsy Borges, 38, Mays Landing, New Jersey who admitted her role in a more than $200,000 mortgage fraud conspiracy involving a property she purchased in Mays Landing, New Jersey, was sentenced today to 18 months in prison.

Borges was originally charged by complaint in May 2017 with Iraida Fuentes, 35, Pleasantville, New Jersey.

According to documents filed in this case and statements made in court:

In December 2002, Borges purchased a property in Mays Landing, New Jersey. Despite failing to make mortgage payments to Wachovia and its successor, Wells Fargo, Borges collected rental income from tenants living in the property and concealed that income from the banks. Borges also falsely represented to Wells Fargo, on multiple occasions, that she could not make the mortgage payments for the property.

Borges subsequently arranged with Wells Fargo for Fuentes to purchase the property through a short sale. Not only did Borges and Fuentes conceal their familial relationship from Wells Fargo, they also concealed the fact that Borges and another conspirator provided Fuentes the funds to purchase the property.

On September 20, 2012, Fuentes purchased the property at a price well below its actual value. On November 22, 2016, B&B Properties, a company owned in part by Borges, purchased the property from Fuentes for $25,000. On February 3, 2017, Borges then individually purchased the property from B&B Properties for one dollar.

Borges previously pleaded guilty before U.S. District Judge Jerome B. Simandle to information charging her with one count of conspiracy to commit bank fraud. Judge Simandle imposed the sentence in Camden federal court.

In addition to the prison term, Judge Simandle sentenced Borges to three years of supervised release and ordered her to pay restitution of $206,405.

Fuentes pleaded guilty on Nov. 6, 2017 and was sentenced Feb. 9, 2018 to two years of probation.

U.S. Attorney Craig Carpenito made the announcement.

U.S. Attorney Carpenito credited agents of the FBI’s Atlantic City Resident Agency, under the direction of Acting Special Agent in Charge Bradley W. Cohen in Newark, with the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorney Jacqueline M. Carle of the U.S. Attorney’s Office Criminal Division in Camden.

Defense counsel: Louis M. Barbone Esq., Atlantic City, New Jersey.

Mark Andreotti, 47, Wyckoff, New Jersey, a former settlement agent, was sentenced today to 144 months in prison for defrauding banks out of $1.1 million using phony loan applications for properties in Bergen and Morris Counties, New Jersey, and for failing to pay over $450,000 in personal income taxes.

Andreotti was previously convicted on all six counts of an indictment charging him with bank fraud, conspiracy to commit bank fraud, tax evasion, and failure to file tax returns..http://www.mortgagefraudblog.com/?s=Andreotti

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

In January 2010, Andreotti submitted a loan application to a bank requesting $625,000 to refinance the mortgage on his house in Wyckoff, New Jersey. Andreotti, who owned and operated Metropolitan Title and Abstract (Metropolitan), used Metropolitan as the settlement agent on the transaction. After the bank transferred the $625,000 for the refinance to Metropolitan’s escrow account, Andreotti spent the money on personal expenses instead of paying off the first mortgage on the house.

In April 2011, Andreotti conspired with another individual who worked as a real estate attorney to obtain $480,000 by claiming that the money would be used to refinance the mortgage on the attorney’s house in Montville, New Jersey. After the bank transferred the money for the refinance to Metropolitan’s escrow account, Andreotti kept $110,000 for himself before transferring the remaining funds to the other conspirator.

In 2010, the IRS initiated collection actions against Andreotti for unpaid personal income taxes. Despite numerous liens and levies and having five rental income properties in addition to his primary residence, Andreotti continued to evade his taxes. He also failed to file tax returns for the tax years 2010 and 2011.

Andreotti was convicted following a two-week trial before U.S. District Judge Susan D. Wigenton, who imposed the sentence in Newark federal court.

In addition to the prison term, Judge Wigenton sentenced Andreotti to five years of supervised release and ordered him to pay restitution of over $2.1 million.

U.S. Attorney Craig Carpenito made the announcement.

U.S. Attorney Carpenito credited special agents of the Federal Housing Finance Agency – Office of Inspector General, under the direction of Special Agent in Charge Steven Perez in Newark; special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark; special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen in Newark; and special agents with the U.S. Attorney’s Office, with the investigation.

The government is represented by Assistant U.S. Attorney Shana Chen in of the U.S. Attorney’s Office Criminal Division in Newark and Special Assistant U.S. Attorney Charlie Divine of the Federal Housing and Finance Agency – Office of Inspector General.

Defense counsel: Marc Neff, Esq., of Marlton

Christopher Goodson, 44, Newark, New Jersey, a New Jersey attorney and Anthony Garvin, 47, Jersey City, New Jersey, are charged by complaint with one count of conspiracy to commit bank fraud. They were charged with running a large-scale mortgage fraud scheme that involved dozens of properties in Jersey City, Clifton, Union, and elsewhere in New Jersey and caused losses of more than $30 million.

According to the Complaint:

From January 2011 through August 2017, Goodson, Garvin, and others engaged in a short sale mortgage fraud conspiracy targeting various New Jersey properties with mortgages that were in default.

As part of the scheme, the conspirators arranged simultaneous fraudulent transactions on the same target property. In the first transaction, which involved the sale by the current owner, the conspirators convinced the financial institution holding the mortgage to accept the sale of the target property at a loss, usually to a buyer who was secretly a conspirator or an entity controlled by the conspiracy.

In the second transaction, the conspirators flipped the same target property from the first buyer to a second buyer, who typically obtained a mortgage from another financial institution using false loan applications, pay stubs, bank account statements and title reports provided by members of the conspiracy. As a result, the second transaction frequently closed for significantly more or even double the price of the first transaction.

Goodson, Garvin, and others allegedly rigged the short sale process at each step in order to maximize the difference in price between the two transactions and keep the victim financial institutions from detecting the fraud.

For instance, Goodson, an attorney, concealed the fact that he played multiple-roles in the short sale transactions, including allegedly generating false preapproval letters from a New Jersey corporation he owned that purported to be a short-term lending company operating out of California. These letters were used to deceive banks into believing that the purchaser – typically a conspirator or entity controlled by Goodson – had the credit necessary for the transaction. Goodson also negotiated the fraudulent short sales with the banks, generated phony deeds that backdated the closing date of the first transactions, and even served as the closing attorney during some of the short sales.

Garvin was a real estate agent and investor who allegedly coordinated fraudulent transactions as part of the scheme.

The conspirators disbursed the funds into various accounts they controlled to conceal their illegal activities and split the profits. In total, the conspiracy defrauded financial institutions out of more than approximately $30 million.

The conspiracy to commit bank fraud count is punishable by a maximum potential penalty of 30 years in prison and a $1 million fine.

Both defendants were arrested this morning and are expected to appear this afternoon before U.S. Magistrate Judge Leda Dunn Wettre in Newark federal court.

Acting U.S. Attorney Fitzpatrick made the announcement and credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark, postal inspectors of the U.S. Postal Inspection Service, under the direction of Acting Inspector in Charge Joseph W. Cronin, and special agents of the Federal Housing Finance Agency (FHFA) – Office of Inspector General, under the direction of Special Agent in Charge Steven Perez in Newark, with the investigation

The government is represented by Assistant U.S. Attorneys David Feder and Zach Intrater of the U.S. Attorney’s Office Economic Crimes Unit in Newark.

The charge and allegations contained in the complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.

 

Victor Santos, a/k/a “Vitor Santos,” 57, Wachtung, New Jersey; Arsenio Santos, a/k/a “Gaspar Santos,” 50, Warren, New Jersey; Fausto Simoes, 64, Millington, New Jersey; and, Raquel Casalinho, 37, Union, New Jersey, were charged today with one count each of conspiracy to commit bank fraud for using “straw buyers” to fraudulently obtain mortgage loans from a bank.

According to the complaint:

From September 2007 through November 2008, Victor Santos, a real estate investor; Arsenio Santos, a builder and Victor’s cousin; Casalinho, a junior home mortgage consultant at the victim bank and Victor’s niece; and Simoes, a real estate settlement attorney, and others allegedly conspired to fraudulently obtain mortgage loans with a total value of more than $5 million.

Victor Santos, Arsenio Santos, and their conspirators allegedly recruited straw buyers to purchase properties in Newark, New Jersey and obtained their identifying information, including Social Security cards and drivers’ licenses. A “straw buyer” was an individual who purchased a property for another in order to conceal the identity of the actual purchaser, usually in exchange for a fee.

In exchange for the use of the straw buyers’ identity and credit history, Victor Santos, Arsenio Santos, and others allegedly agreed to pay each of the straw buyers a fee of approximately $5,000, provide the straw buyer’s down payment and cash required for closing, secure tenants to lease the purchased property and make the mortgage payments on each of the fraudulently obtained mortgages. These secret agreements were not disclosed to the bank.

In accordance with Victor Santos’ instructions, the straw buyers’ information was provided to Casalinho and was used to prepare fraudulent mortgage loan applications that contained a variety of false statements, including the identity of the actual buyer. For the two representative schemes highlighted in the complaint, Casalinho, Victor Santos, Arsenio Santos, and their conspirators prepared and submitted mortgage applications containing false information to the bank and obtained loans totaling more than $900,000. The conspirators allegedly arranged transactions for the Newark properties whereby the straw buyers would nominally purchase the properties for far more than the sellers had agreed to sell them, and the conspirators kept the difference between the contract price and the amounts the sellers received.

Simoes was the closing attorney on approximately 10 of the fraudulent transactions and signed and certified as true the final settlement statements. These statements falsely stated that the cash required for closing for each transaction came from the straw buyer. In fact, Victor Santos and his conspirators provided those funds to Simoes and the funds were deposited into Simoes’ attorney trust account. For certain transactions, a shell company – whose bank account was controlled by Victor Santos and a conspirator and to which funds from fraudulently obtained mortgage loans were disbursed – was the source of the cashier’s checks given to Simoes to fund the buyer’s cash required at closing. For other transactions, down payments came from an account owned and controlled by Arsenio Santos and Victor Santos, the proceeds of the mortgage loan itself after funding or closing, or from the proceeds of a previously obtained fraudulent loan.

The conspiracy to commit bank fraud carries a maximum potential penalty of 30 years in prison, a fine of $1 million or twice the gross gain to the defendants or twice the gross loss to others whichever is greater.

Acting U.S. Attorney William E. Fitzpatrick made the announcement.

Acting U.S. Attorney Fitzpatrick credited special agents of the Federal Housing Finance Agency, Office of Inspector General, under the direction of Special Agent in Charge Steven Perez, and special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher of the Newark office, with the investigation leading to today’s charges.

The government is represented by Special Assistant U.S. Attorneys Kevin DiGregory and Charlie Divine and Senior Litigation Counsel Andrew Leven of the U.S. Attorney’s Office’s Economic Crimes Unit in Newark.

The charges and allegations contained in the complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.