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Duo Sentenced In Fraudulent Short Sale Scheme To Defraud Mortgage Lenders

Stephanie Abbott —  November 14, 2019 — Leave a comment

George Bussanich Sr., 60, of Park Ridge, New Jersey and George Bussanich Jr., 39, Upper Saddle River, New Jersey, a father and son, were sentenced today to 27 months in prison and eight months of home detention, respectively, for their roles in a scheme to use straw buyers and short sales on properties to defraud mortgage lenders out of hundreds of thousands of dollars and to avoid paying taxes on the proceeds of the scheme.

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

Between 2009 and 2012, Bussanich Sr. and Bussanich Jr. conspired to defraud mortgage lenders through the sham short sales of two properties, located on Jefferson Avenue, Emerson, New Jersey, and Lillian Street, Park Ridge, New Jersey.

Bussanich Sr. controlled various purported medical clinics and surgical centers in New Jersey. He recruited his business partner and an employee from a sleep clinic in Cliffside Park, New Jersey, to pose as legitimate, unrelated buyers of the properties. In order to conceal his involvement, Bussanich Sr. used a business entity he controlled to fund each short sale transaction and the subsequent repurchase of those properties. Bussanich Jr., the owner of record of both properties, negotiated the short sales with the lenders using materially false information that misrepresented the circumstances of the short sales, the relationships of the parties, and the source of funding for the transactions.

Approximately two years after the fraudulent short sales, Bussanich Sr. bought the properties back from the straw purchasers using money that he owed his business partner from an earlier venture.

Bussanich Sr. and Bussanich Jr. also failed to disclose on their tax returns income that they received from the purported medical clinics and surgical centers. Bussanich Sr. and Bussanich Jr. used those funds to purchase high-end luxury vehicles and to purchase official bank checks to fund the fraudulent short sales.

Bussanich Sr., was sentenced to 27 months in prison. He previously pleaded guilty before U.S. District Judge Claire C. Cecchi to a superseding information charging him with one count of bank fraud conspiracy and one count of tax evasion. Bussanich Jr., was sentenced to eight months of home detention. He previously pleaded guilty to tax evasion. Judge Cecchi imposed both sentences today in Newark federal court.

In addition to the prison terms, Judge Cecchi sentenced Bussanich Sr. to five years of supervised release and Bussanich Jr. to three years of supervised release.

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 W. Ehrie in Newark, and special agents of IRS – Criminal Investigation, under the direction of Special Agent in Charge John R. Tafur, with the investigation leading to today’s sentencings.

The government is represented by Assistant U.S. Attorney Ari B. Fontecchio of the Office’s Economic Crimes Unit, and Nicholas P. Grippo, Attorney in Charge of the Trenton Office.

Defense counsel: Stacy Biancamano Esq., Jersey City, New Jersey

 

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Man Admits to Fraudulent Short Sale Buy-Back Scheme

Stephanie Abbott —  September 4, 2019 — Leave a comment

George Bussanich Sr., 60, Park Ridge, New Jersey, today admitted his role in a scheme with his son to use straw buyers and short sales on properties to defraud mortgage lenders out of hundreds of thousands of dollars and to avoid paying taxes on the proceeds of the scheme.

Bussanich Sr. pleaded guilty before U.S. District Judge Claire C. Cecchi in Newark federal court to a superseding information charging him with one count of bank fraud conspiracy and one count of tax evasion. His son, George Bussanich Jr., 39, Upper Saddle River, New Jersey, pleaded guilty to tax evasion before Judge Cecchi in October 2017 and is scheduled to be sentenced September. 25, 2019.

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

Between 2009 and 2012, Bussanich Sr. and Bussanich Jr. conspired to defraud mortgage lenders through the sham short sales of two properties located on Jefferson Avenue, Emerson, New Jersey, and Lillian Street, Park Ridge, New Jersey.

Bussanich Sr. controlled various purported medical clinics and surgical centers in New Jersey. He recruited his business partner and an employee from a sleep clinic in Cliffside Park, New Jersey, to pose as legitimate, unrelated buyers of the properties. In order to conceal his involvement, Bussanich Sr. used a business entity he controlled to fund each short sale transaction and the subsequent repurchase of those properties. Bussanich Jr., the owner of record of both properties, negotiated the short sales with the lenders using materially false information that misrepresented the circumstances of the short sales, the relationships of the parties, and the source of funding for the transactions.

Approximately two years after the fraudulent short sales, Bussanich Sr. bought the properties back from the straw purchasers using money that he owed his business partner from an earlier venture.

Bussanich Sr. also failed to disclose on his tax returns hundreds of thousands of dollars in income that he received from his purported medical clinics and surgical centers. He used those funds to purchase high-end luxury vehicles worth a total of over $300,000, including two Land Rover sport utility vehicles and a Ferrari Spyder. He also used those funds to purchase official bank checks to fund the fraudulent short sales.

The bank fraud conspiracy charge carries a maximum potential penalty of 30 years in prison and a maximum potential fine of $1 million. The tax evasion charge carries a maximum potential penalty of five years in prison and a maximum potential $250,000 fine. Sentencing is scheduled for Jan. 23, 2020.

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 W. Ehrie in Newark, and special agents of IRS – Criminal Investigation, under the direction of Special Agent in Charge John R. Tafur, with the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorney Ari B. Fontecchio of the Office’s Economic Crimes Unit, and Nicholas P. Grippo, Attorney in Charge of the Trenton Office.

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Four Indicted in Mortgage Fraud Scheme

Stephanie Abbott —  July 9, 2019 — Leave a comment

Jorge Flores, 48, Oakdale, New York; Joseph A. Gonzalez, 45, Henderson, Nevada; and Jose L. Piedrahita, 57, and Yorce Yotagri, 52, both of Freeport, New York, have been indicted for carrying out a scheme to use phony information and simultaneous loan applications at multiple banks to fraudulently obtain home equity lines of credit (HELOCs).

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

From 2010 through 2018, Flores and Simon Curanaj, a real estate broker in the Bronx, New Yourk who has previously pleaded guilty and is awaiting sentencing, ran a mortgage fraud scheme in which they applied for more than $9 million in HELOCs from banks on residential properties in New Jersey and New York.

For instance, Gonzalez and Flores used a property in Jersey City, New Jersey, as part of the scheme. Gonzalez had been allowed to live at the property by the owner in exchange for management services, but neither he nor Flores owned the property. Gonzalez also recruited an individual with good credit to act as a straw buyer (Individual 1). Later, unbeknownst to the owner of the property, a “quitclaim” deed – a deed which contains no warranties of title – was prepared transferring the property to Individual 1. The signatures on the deed were forged.

Gonzalez and Flores then applied for two HELOCs from multiple banks using the Jersey City property as collateral in Individual 1’s name. They concealed the fact that the property offered as collateral 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 contained false information concerning Individual1’s income, which was stated to be higher than his actual income. At the time the applications were made, the value of the property was less than the amount of the HELOC loans for which Gonzalez and Flores applied.

The victim banks eventually issued loans to Individual 1 in excess of $500,000. After the victim banks funded the HELOCs and deposited money into Individual 1’s bank account, Individual 1 disbursed almost all of it to Gonzalez, Flores, and others. Gonzalez used $43,000 of the illicit proceeds to buy a luxury car. Individual 1 eventually defaulted on both HELOC loans.

In another example, Flores, Piedrahita, and Yotagri used a property in Freeport, New York, to carry out a similar scheme.

Each defendant is charged by indictment with one count of conspiracy to commit bank fraud. Flores and Gonzalez are also charged with two substantive counts of bank fraud. Yotagri was arraigned July 8, 2019, before U.S. District Judge John Michael Vazquez in Newark federal court. Flores and Piedrahita remain at large. Gonzalez will be arraigned at a date to be determined.

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

U.S. Attorney Craig Carpenito made the announcement.

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

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

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

 

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Man Sentenced Fraudulently Purchasing Three Homes Using Bad Checks

Stephanie Abbott —  June 17, 2019 — Leave a comment

Lawrence Humphrey, 50, Brooklyn, New York, was sentenced today to five years in state prison for engaging in a fraudulent scheme in which he conspired with a woman to use bad checks to purchase three homes in New Jersey.

Humphrey was indicted in December 2016 along with his co-conspirator, Tara Stokes, 51, Flushing, New York, as the result of an investigation by the Division of Criminal Justice Financial & Computer Crimes Bureau. Stokes pleaded guilty to second-degree theft by deception and was sentenced on May 18, 2018 to four years in prison by Judge Smith. Humphrey was wanted as a fugitive in this case for two years.

The investigation revealed that Stokes and Humphrey presented checks drawn on a closed bank account to buy three homes in New Jersey. In each case, Stokes used the name “Tara Humphrey.” Two of the properties are located in Gloucester County, Greenwich Township and Monroe Township, and one is located in Winslow Township, Camden County, New Jersey. The closed bank account was in the name of a fictitious law firm, Law Offices of Tara Humphrey. Tara Stokes is not a lawyer.

Stokes and Humphrey wrote multiple bad checks for two of the properties, writing new checks when the first checks bounced. Three bad checks for $240,000 were written for the Monroe property, all from the account of the fictitious law firm. Bad checks for $296,639 and $299,139 were issued for the Greenwich property, with the second check being drawn on a different bank account, which was open but did not have sufficient funds. A bad check for $305,684 drawn on the law firm account was written for the Winslow property. Bad checks for $2,500 and $10,000 were also written from that account to pay deposits on the Greenwich and Winslow homes.

While titles for the three properties changed hands at the closings, in each case the fraud was quickly uncovered, and two of the deeds were not recorded. The state’s investigation began with a referral from a law firm representing the title company that handled the closing for the Monroe Township property.

Humphrey pleaded guilty on April 29, 2019 to a charge of second-degree theft by deception.

Attorney General Gurbir S. Grewal made the announcement.

“Because of the large sums of money involved, real estate transactions and mortgage loans are a prime target for con artists, who impose major costs on the industry that are passed on to honest consumers,” said Attorney General Grewal. “By sending criminals like Humphrey and Stokes to prison, we deliver a strong deterrent message to others who might consider committing this type of fraud.”

“Financial fraud disrupts commerce and imposes major costs on individuals as well as businesses,” said Director Veronica Allende of the Division of Criminal Justice. “We are committed to fighting fraud by aggressively investigating and prosecuting white collar criminals like Humphrey and his co-conspirator, Stokes. I commend the attorneys, detectives, and staff in our Financial & Computer Crimes Bureau who ensured that both of these defendants received substantial prison sentences.”

Deputy Attorney General William N. Conlow was the lead prosecutor on the case, and Deputy Attorney General Derek Miller handled the sentencing for the Division of Criminal Justice Financial & Computer Crimes Bureau. Detective Richard Loufik was the lead detective for the Division of Criminal Justice.

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A.G. Announces Payments To Borrowers From Settlement With PHH Mortgage Corporation

Stephanie Abbott —  June 3, 2019 — 8 Comments

A settlement agreement was reached today with 800 New Yorkers for a $45 million settlement with New Jersey-based mortgage lender and servicer PHH Mortgage Corporation.

The settlement agreement reached by 49 states, the District of Columbia and 45 state mortgage regulators resolves allegations that PHH, the nation’s ninth largest non-bank residential mortgage servicer, improperly serviced mortgage loans from January 1, 2009 through December 31, 2012. The $45 million settlement includes $30.4 million in payments to borrowers, and additional payments to states and mortgage regulators for costs and fees related to the investigation.

Over 800 New York borrowers applied for payments. Rust Consulting, the settlement administrator, issued checks to claimants on Friday, May 31, 2019. Borrowers who lost their homes to foreclosure during the eligible period will receive approximately $1,500, and borrowers referred (but did not ultimately lose their home) to foreclosure will receive approximately $540. Total payments to New York State borrowers exceeds $666,000.

The settlement agreement also requires PHH to adhere to comprehensive mortgage servicing standards, conduct audits, and provide audit results to a committee of states. The settlement does not release PHH from liability for conduct that occurred beginning in 2013.

Attorney General Letitia James made the announcement.

“Today, homeowners who were unfairly and unwittingly victimized receive a piece of justice that they deserve,” said Attorney General Letitia James. “It is unfortunate that New York homeowners were victimized by improper mortgage servicing in the first place, but are at least now receiving the financial compensation owed to them. We will continue to use every resource at our disposal to reverse the damaging practices that helped to create the foreclosure crisis, and hold bad-acting mortgage companies accountable.”

“Empire Justice Center applauds Attorney General Letitia James for representing New York homeowners in the recent multi-state settlement with PHH Mortgage Corporation,” said Kirsten Keefe, Senior Attorney and Program Director for HOPP Anchor Partner Program at the Empire Justice Center. “The settlement requires PHH to clean-up its mortgage servicing practices so that they help, rather than harm homeowners. In addition, over 800 New Yorkers will share in a total of cash payments of more than $660,000. Fortunately in New York State, many homeowners who might have otherwise lost their homes because of the misconduct of PHH, received assistance from housing counseling and legal service providers funded through the Attorney General’s Homeowner Protection Program (HOPP) and so remain in their homes. We are very fortunate to have an Attorney General who is continuing to press for the rights of New York’s homeowners and communities.”

“We commend the Attorney General’s office for holding mortgage servicer’s accountable for their actions to protect New Yorker’s homes, which is their largest and most important asset,” said Susan Boss, Executive Director of The Housing Council at PathStone. “Along with the A.G’s office, we will continue to advocate for all New York homeowners.”

“We are thankful to Attorney General James for her dedicated support of New York homeowners,” said Christie Peale, CEO and Executive Director of the Center for NYC Neighborhoods. “This settlement provides direct compensation to hundreds of families, some of whom lost their homes to foreclosure during the financial crisis. Just as importantly, it shows that New York State will hold other mortgage lenders and servicers accountable for fully complying with all servicing regulations, and treating homeowners equitably.”

The case was handled Deputy Bureau Chief Laura J. Levine under the supervision of Bureau Chief Jane M. Azia in the Consumer Frauds and Protection Bureau, and Executive Deputy Attorney General of Economic Justice Christopher D’Angelo.

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Two Men Admit Roles in Fraud Scheme

Stephanie Abbott —  May 31, 2019 — Leave a comment

Steve Young Kang, a/k/a “Steven Young Kang” and “Young Tae Kang,” 64, Ridgefield, New Jersey, and Young Jin Son, a/k/a “Joshua Son,” 49, Norwood, New Jersey, pleaded guilty today for their respective roles in a scheme to defraud financial institutions and others.

According to documents filed in these cases and statements made in court:

Kang, Son and others fraudulently induced mortgage lenders to participate in “short sale” transactions. In a typical short sale transactions, a financial institution agrees to allow a house owner in financial distress to sell his or her home for less than they owe on their mortgages. Such transactions are called short sales because the market value of the house is less than the amount owed by the house owner and the lender agrees to accept a payment “short” of the amount owed by the house owner.

Kang, a real estate broker and agent, admitted to a scheme in which, from June 2013 to January 2017, he sold his own properties and recruited others to sell properties in short sales to a co-schemer, Mehdi Kassai, who was able to obtain the properties for substantially less than the properties were actually worth through false documents, straw buyers, cosmetic damage to properties, and restricting the ability of others to bid on and buy those properties. Kassai then sold many of those properties to third-parties at a substantial profit. Kang defrauded financial institutions and others of $2.7 million in this manner.

Son, a real estate broker and agent, admitted recruiting others to sell properties in short sales to Kassai, who obtained the properties for substantially less than they were actually worth through false documents, straw buyers, cosmetic damage to properties, and restricting the ability of others to bid and buy those properties. Kassai sold many of those properties to third-parties at a substantial profit. Son defrauded financial institutions and others of $1.9 million in this manner.

The bank fraud and wire fraud charges each carry a maximum potential statutory penalties of 30 years in prison and a $1 million fine. Kang and Son have both agreed to forfeit the proceeds of the scheme. Sentencing for both defendants is scheduled for Oct. 1, 2019. Kassai previously pleaded guilty to his role in the scheme and is awaiting sentencing.

U.S. Attorney Craig Carpenito made the announcement.

U.S. Attorney Carpenito credited the Bergen County Prosecutor’s Office, under the direction of Prosecutor Mark Musella; special agents of the Federal Housing Finance Agency, Office of Inspector General, under the direction of Special Agent in Charge, Robert Manchak; and special agents of the U.S. Department of Homeland Security Investigations, under the direction of Special Agent in Charge Brian Michael, with the investigation leading to the guilty pleas.

The government is represented by Senior Trial Counsel Andrew Leven of the Healthcare & Government Fraud Unit of the U.S. Attorney’s Office, District of New Jersey, and Special Assistant U.S. Attorneys Charlie Divine and Kevin Di Gregory of the Federal Housing Finance Agency, Office of Inspector General.

 

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Guilty Plea in Straw Buyer Scheme

Rachel Dollar —  December 3, 2015 — Leave a comment

Miguel LaRosa, 48, Elizabeth, New Jersey, pleaded guilty  in Newark federal court to an information charging him with one count of conspiracy to commit wire fraud for recruiting straw buyers and submitting bogus loan applications as part of large-scale mortgage fraud scheme involving properties in northern New Jersey.

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

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Straw Buyer and Down Payment Fraud Guilty Plea

Rachel Dollar —  November 3, 2015 — Leave a comment

Antonio Pimenta, 47, Neshanic Station, New Jersey, admitted his role in a scheme that used straw buyers and phony loan documents to fraudulently obtain a $400,500 loan on a property in Irvington, New Jersey.

According to documents filed and statements made in court: Pimenta owned and managed Kelmar Construction Co. Kelmar built multiple properties in Irvington, New Jersey. These properties were sold to straw buyers utilizing fraudulent mortgage loans brokered by loan officer, Klary Arcentales, 47, Lyndhurst, New Jersey, and closed by settlement agent Linda Cohen, 57, Orange, New Jersey, who used fraudulent settlement statements to hide the true sources and destinations of the mortgage funds. The straw buyers had no means of paying the mortgages, and many of the properties entered into foreclosure proceedings. Continue Reading…

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Daughter and Parents Guilty in Foreclosure Rescue Scheme

Rachel Dollar —  November 2, 2015 — Leave a comment

Silver Buckman, 37, Cherry Hill, New Jersey, her parents, Vincent Foxworth, 70, Turnersville, New Jersey and Cynthia Foxworth, 64, Turnersville, New Jersey, were convicted by a federal jury for a mortgage fraud scheme that stripped the equity from the homes of desperate homeowners facing foreclosure.  The three were found guilty of bank fraud, wire fraud, and conspiracy to commit bank fraud and wire fraud. Their scheme caused losses to mortgage lenders of approximately $3.8 million.

The defendants offered to help financially-vulnerable individuals save their homes from foreclosure or obtain money from the equity in their homes but, instead, defrauded the homeowners and mortgage lenders. Buckman owned and operated Fresh Start Financial Services (“FSFS”), in Mount Laurel, New Jersey and was an employee of American Home Lending as well as a mortgage broker for American One Mortgage (“AOM”). Her father is an experienced Realtor.

Between October 2006 and November 2009, Buckman and her co-defendants allegedly targeted financially vulnerable homeowners and represented to them that they could improve their credit, save their homes from foreclosure, or provide them with money through Buckman’s lease buyback program. The homeowners were told that “investors” would be used to temporarily refinance their homes and that they could repurchase the homes in one year, or once they regained their financial footing. The defendants also allegedly induced the homeowners into signing documents related to the sale and lease of their homes by their representations that the homeowners would remain on the title to their homes, that the equity from their homes would be placed into an individual escrow account in their names, and that new mortgages would be paid from the escrow accounts to establish their timely payment histories.

In order to carry out the scheme, Buckman recruited Vincent Foxworth and Cynthia Foxworth and others to be straw borrowers. Buckman submitted false financial and employment information about the straw borrowers to mortgage lenders. Once lenders agreed to fund the mortgage loans, Buckman prevented the homeowners from receiving the settlement proceeds and did not put money into escrow accounts for the homeowners. Instead, the defendants distributed the proceeds amongst themselves. Buckman used only a fraction of the homeowners’ monies toward the payment of the mortgages obtained by the straw borrowers for the homeowners’ homes and thereby caused the loans to go into default.

U.S. District Court Judge R. Barclay Surrick scheduled a sentencing hearing for January 29, 2016.The defendants each face a potential advisory sentencing guideline range of approximately 87 to 108 months in prison plus restitution.

The case was investigated by the Federal Bureau of Investigation, the United States Postal Inspection Service and IRS Criminal Investigations. It is being prosecuted by Assistant United States Attorney Anita Eve.

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Fryar’s next day in court to focus on financial restitution

Former NFL football star Irving Fryar just finished his first week in a New Jersey state prison after a bitter court battle led to a guilty verdict in a $1.2 million mortgage scam.

But his next big fight – his restitution – looms.

On Nov. 9 state Superior Court Judge Jeanne T. Covert will hold a hearing in Mount Holly to determine how much Fryar must pay to the banks that he and mortgage broker William Barksdale victimized in late 2009 and early 2010 with the assistance of Fryar’s mother.

 Posted by Rachel Dollar  onOctober 13, 2015 In Mortgage Fraud on the web
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