Archives For New York

Jacqueline Graham, 54, formerly of Antioch, California, and Levittown, Pennsylvania was sentenced today to 132 months in prison in connection with a $38 million fraudulent mortgage debt elimination scheme.

According to the Indictment in the case, the evidence presented at trial, and statements made in public court filings and proceedings, including Graham’s sentencing hearing:

From at least 2011 to at least 2012, Graham partnered with Bruce Lewis, 67, formerly of Alaska and Washington State, and John Ruzza 49, formerly of Mahopac, New York in operating the Valhalla, New York-based Terra Foundation, which held itself out as a business that would investigate and eliminate mortgage loans in exchange for fees, soliciting clients who were having difficulties making their mortgage payments.  In fact, however, Terra engaged in a wide-ranging scheme to defraud clients, county clerks’ offices, and banks.

The fraudulent scheme, which was created by Graham and Lewis, involved Terra performing “audits” of clients’ mortgages, sending pseudo-legal paperwork to the banks and/or lenders holding the mortgages, and ultimately filing purported mortgage discharges with the relevant county clerks’ offices.  As a result, anyone doing a title search for one of Terra’s clients would see that the client’s mortgage had been satisfied.  The mortgages had not, however, been discharged, and the mortgages were eventually reinstated, after the clients paid their fees.

In order to effectuate the scheme, Graham, Lewis, and Ruzza involved others, including Rocco Cermele, 57, Yonkers, New York the director of operations, Paula Guadagno, 62, Verplanck, New York, who filed discharges on behalf of Terra, and Anthony Vigna, 61, Thornwood, New York, a lawyer and CPA who worked in Terra’s offices.  Vigna was formerly an Assistant Corporation Counsel for the City of Yonkers, and a college accounting and law professor, including stints on the faculties of Mercy College, Iona College, SUNY Maritime College, College of Mount St. Vincent, and Westchester Community College.

In total, Graham and her co-conspirators filed over 60 fraudulent discharges in Westchester and Putnam Counties in New York, and in Connecticut.  The fraudulent discharges claimed to discharge mortgages with a total loan principal of nearly $38 million. http://www.mortgagefraudblog.com/?s=Jacqueline+Graham

In addition to her prison term, Graham was sentenced to five years of supervised release and ordered to pay restitution to her victims in the amount of $694,450 and forfeiture of $138,941.86.

Lewis was previously was sentenced by Judge Román to seven years in prison, three years of supervised release, and forfeiture of $149,408.

Vigna was previously was sentenced by Judge Román to one year and one day in prison, three years of supervised release, and $250,500 of restitution.

Ruzza was previously pled guilty before U.S. District Judge Cathy Seibel to one count of participating in a conspiracy to commit mail fraud, wire fraud, and bank fraud relating to the Terra scheme, as well as one count of participating in a conspiracy to commit wire fraud, two counts of bank fraud, two counts of wire fraud, and one count of obstruction of justice.

Cermele and Guadagno previously pled guilty to their participation in the scheme.

Graham previously was convicted in June 2019 after a two-week trial before U.S. District Judge Nelson S. Román, who also imposed today’s sentence.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, made the announcement.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Jacqueline Graham brazenly defrauded vulnerable homeowners during the housing crisis by falsely promising that, for substantial fees, she could make millions of dollars of their mortgage debt disappear.  In reality, she pilfered her victims’ money, leaving them far worse off, and some ended up losing their homes.  Now Graham will spend 11 years in federal prison for preying upon her many victims.”

Mr. Berman praised the outstanding investigative work of the Federal Bureau of Investigation.  Mr. Berman also thanked the Westchester County District Attorney’s Office and the Department of Housing and Urban Development for their assistance in the case.

This case is being handled by the Office’s White Plains Division.  Assistant United States Attorneys David Felton, Michael Maimin, and James McMahon are in charge of the prosecutions.

Craig Hecht, 52, Mount Sinai, New York, was sentenced today for stealing a vacant brownstone worth over $1 million in a deed fraud scheme targeting an 80-year-old Bedford-Stuyvesant homeowner.

According to the evidence, Hecht and an unapprehended co-defendant stole the deed to 260 Clifton Place, Bedford-Stuyvesant, New York, a brownstone owned by an 80-year-old retired teacher. The victim and her family lived in the residence for over three decades. In 2010, the family vacated the property after a fire made the building uninhabitable.

Hecht formed an entity called Ernestina Thomas LLC that he filed with the New York State Department of State on April 20, 2015. Ten days later, the co-defendant opened a bank account called Ernestina Thomas LLC (ET). The victim did not know about or consent to any of this.

On September 18, 2015, according to the evidence, Hecht set up a closing where 260 Clifton Place was transferred to an entity called TDA Development. A deed with the victim’s forged signature, which transferred the property from her to TDA, was filed and recorded with the City Register. The bulk of the proceeds of the sale went into an ET account which the co-defendant controlled.

Shortly thereafter, Hecht offered 260 Clifton Place to a prospective buyer. On November 5, 2015, the co-defendant opened a bank account for TDA and the following day the property was transferred from TDA to the buyer at a closing for $850,000, with most of the proceeds of that sale going into the co-defendant’s TDA account. From the funds stolen out of the two closings, the co-defendant wired $190,000 to an account he had in Athens, Greece, withdrew another $120,000 in a series of cash withdrawals and transferred over $250,000 to an account held by Hecht’s wife. http://www.mortgagefraudblog.com/man-indicted-for-forging-deed/

The victim was notified of the theft when a neighbor called to tell her that someone was working on the house and introduced himself as the new property owner. She then notified the District Attorney’s Office.

Hecht was sentenced to one-and-a-half to four-and-a-half years in prison by Brooklyn Supreme Court Justice Danny Chun, who nullified the deed the defendant forged and issued a judgment order of restitution for $850,000 to the title insurance company for losses it incurred reimbursing the home buyer. The defendant pleaded guilty to second-degree grand larceny and second-degree money laundering on December 4, 2019.

Brooklyn District Attorney Eric Gonzalez made the announcement.

District Attorney Gonzalez said, “This defendant targeted an elderly homeowner, forging her signature and capitalizing on her absence in an underhanded effort to steal her home. I remain committed to protecting Brooklyn homeowners and I hope today’s sentence sends a clear message to those trying to take advantage of seniors or those considering selling their homes —you will be prosecuted and held fully accountable for your crimes.”

The case was investigated by Detective Investigators assigned to the KCDA Investigations Bureau. Supervising Financial Investigator Vincent Jones, of the District Attorney’s Investigations Division, assisted in the investigation.

The case was prosecuted by Senior Assistant District Attorney Linda Hristova, with assistance from Senior Assistant District Attorney Elliott Wertheim and Senior Assistant District Attorney Patrick Cappock, of the District Attorney’s Frauds Bureau, under the supervision of Assistant District Attorney Richard Farrell, Chief of the District Attorney’s Real Estate Fraud Unit and Assistant District Attorney Michel Spanakos, Deputy Chief of the District Attorney’s Investigations Division, and the overall supervision of Assistant District Attorney Patricia McNeill, Chief of the District Attorney’s Investigations Division.

Yorce Yotagri, 53, Freeport, New York, today admitted participating in a conspiracy to carry out a $9 million scheme to use bogus information and simultaneous loan applications at multiple banks to fraudulently obtain home equity lines of credit, a scheme known as “shotgunning,”

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

Yotagri was a business partner of Jorge Flores ,Oakdale, New York, and Jose Piedrahita,  Freeport, New York, two conspirators also charged in the indictment. From 2010 through February 2018, Yotagri, Flores, Piedrahita, and others conspired to fraudulently obtain multiple home equity lines of credit (HELOC) from banks on residential properties in New Jersey and New York.

In August 2016, Yotagri lived at a property in Freeport, New York. A quitclaim deed was prepared that facilitated the transfer of ownership of the property to Yotagri and Piedrahita even though Piedrahita did not own the property.

In September 2016, with the Freeport property now in the names of Yotagri and Piedrahita, the conspirators applied for a $290,000 HELOC from a victim bank in Yotagri’s and Piedrahita’s names using the property as collateral. Piedrahita’s contact information appeared on the HELOC application on the Freeport property, which also contained inflated income and assets for Piedrahita. On Dec. 2, 2016, based on the false representations contained in the application, the victim bank issued a HELOC to Piedrahita for $290,000. Piedrahita then disbursed the $290,000 to himself, Yotagri, and Flores. The HELOC funds were never repaid.

In January 2017, Flores called another victim bank and applied for a second HELOC in Piedrahita’s name for $250,000 – again using the Freeport property as collateral. This time Flores’ email address and phone number appeared on the HELOC application on the Freeport property. To demonstrate to the second victim bank that the property was unencumbered by any senior mortgages, Flores and Piedrahita sent several fraudulent documents to the victim bank to conceal the existence of or amounts owed on senior mortgages. The false documents the defendants submitted included a series of false payoff letters and fake checks from other banks, all submitted to deceive the victim bank into believing that the remaining value of the senior mortgages on the Freeport property was far less than what was actually owed.

On March 22, 2017, the second victim bank issued a HELOC to Piedrahita for $250,000. Piedrahita then disbursed nearly the entirety of the HELOC funds to himself and Yotagri. The funds obtained by Piedrahita and Yotagri from the HELOC were not repaid and were overdrawn, causing losses to the second victim bank totaling approximately $290,000.

At the time the applications for the two HELOCS were made, there was not sufficient equity in the Freeport property to support the $540,000 in HELOC applications made by Flores, Piedrahita, and Yotagri.

The overall scheme, which included HELOC loans for approximately 17 different properties, resulted in over $9 million in losses to the victim banks. http://www.mortgagefraudblog.com/?s=Yorce+Yotagri

Yotagri faces a maximum potential penalty of 30 years in prison and a $1 million fine, or twice the gross gain or loss from the offense. Sentencing is scheduled for June 25, 2020.

Yotagri pleaded guilty before U.S. District Judge John Michael Vazquez in Newark federal court to an indictment charging him with one count of conspiracy to commit bank fraud.

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 (FHFA-OIG), 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 guilty plea.

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-OIG.

The charges and allegations against Yotagri’s co-defendants contained in the indictment are merely accusations, and they are presumed innocent unless and until proven guilty.

Defense counsel: Randy Scott Zelin Esq., New York

Edmundo Roman-Perez, 70, Sunset Park, Brooklyn, an attorney has been arraigned today on an indictment in which he is charged with several counts of grand larceny for allegedly stealing approximately $280,000 in down payments he received to hold in escrow from two clients he represented in the sale of their homes.

According to the investigation, between October 2018 and March 2019, the defendant represented a couple in the sale of their $1,350,000 two-family home in Sunset Park, Brooklyn. It is alleged that the defendant received a $135,000 down payment from the buyers that he was to hold in escrow until closing.

In March 2019, shortly after the closing, the defendant issued two checks to cover the amount of the down payment, each in the amount of $65,600, both checks were allegedly returned because of insufficient funds.

Similarly, between November 2018 and April 2019, the defendant represented three brothers in the sale of their $1,500,000 two-family home in Dyker Heights, Brooklyn. It is alleged that the defendant received a $150,000 down payment from the buyers that he was to hold in escrow until closing.

In April 2019, three days after closing, the defendant allegedly issued three checks to the victims, each in the amount of $49,187.10, to cover the amount of the down payment. It is alleged that all three checks were returned because of insufficient funds.

Roman-Perez was arraigned today before Brooklyn Supreme Court Justice Danny Chun on an indictment in which he is charged with second-degree grand larceny, three counts of third-degree grand larceny and five counts of issuing a bad check. He was released without bail and ordered to return to court on April 1, 2020.

Brooklyn District Attorney Eric Gonzalez made the announcement.

District Attorney Gonzalez said, “This defendant allegedly betrayed the trust of his clients and abused his power as an attorney, taking advantage of the escrow accounts he controlled to steal hundreds of thousands of dollars. We will now seek to hold him accountable for this serious breach of trust.

The case was investigated by Supervising Financial Investigator Deborah Wey of the District Attorney’s Investigations Division.

The case is being prosecuted by Senior Assistant District Attorney Katherine Zdrojeski of the District Attorney’s Public Integrity Unit, under the supervision of Assistant District Attorney Laura Neubauer, Chief of the Public Integrity Unit, and Assistant District Attorney Michel Spanakos, Deputy Chief of the Investigations Division, and the overall supervision of Assistant District Attorney Patricia McNeill, Chief of the Investigations Division.

 

Vision Property Management, LLC, a South Carolina based real estate company, its CEO Alex Szkaradek, and a number of affiliated companies have agreed today, subject to court approval, that more than $3.75 million will be paid in consumer restitution for engaging in and operating an illegal, deceptive, and unlicensed mortgage-lending business that targeted, among others, the disabled, the elderly, single parents, and others living on fixed incomes.

Specifically, the settlement includes cash payments of $600,000 that will be distributed to numerous New York consumers who were victims of Vision’s conduct and have, for the most part, moved out of their previous homes. Additionally, more than $3.15 million in unpaid principal for 58 homes will be forgiven by Vision as restitution. The ownership of these 58 homes will be transferred, free and clear of any future payments, to Vision’s current New York consumers. Additionally, the defendants must wind down their remaining business in New York over the following year, and along with any businesses they take a controlling interest in, are permanently enjoined from engaging in any future residential real estate business in New York.

The settlement is set to resolve an August 2019 federal lawsuit, filed in the Southern District of New York, alleging that, since at least 2011, Vision and its affiliates profited from predatory, subprime home loans at the expense of some of the most vulnerable New Yorkers, primarily in Upstate and Central New York. In the complaint, Attorney General James and Superintendent Lacewell accused the company of buying severely distressed properties and marketing them at a substantial markup with high-cost, interest rates, in the range of 10% to 25%. Vision rarely disclosed these high interest rates and typically made no repairs or renovations to the dilapidated homes they were selling, illegally passing those costs on to consumers. Further, Vision was not properly licensed to engage in seller finance lending in New York, which it was required to be beginning in late 2011, and thus was operating illegally when entering into these transactions.

The lawsuit further charged that Vision targeted vulnerable consumers who , by the company’s own admission, were eager to share in the American dream of homeownership, but could not qualify for conventional financing due to various employment, health, marital, or other financial reasons. While Vision claimed its “unique” business model was a path to homeownership, in reality, the company made significant profits with little risk by skirting consumer protections and financial regulations and trapping consumers with high cost mortgages and often uninhabitable homes.

Despite placing the burden of repairing and maintaining the homes on consumers, Vision did not fully disclose the many dangerous, unhealthy, and unsafe conditions in its homes, and in many instances concealed the extent of these conditions by leaving the electricity and other utilities turned off while consumers took walk throughs of the homes. These conditions included pest infestations; faulty electrical wiring; water damage; missing heaters, pipes, water tanks, and septic systems; mold; asbestos; foundation damage; and severely damaged and rotted out, floors, windows, walls, and roofs. The high cost of Vision’s loans combined with the significant cost of repairing these violations set consumers up to fail. Moreover, Vision routinely evicted consumers who had invested substantial sums of money in repairs without offering them the foreclosure protections to which they were entitled.

The settlement being announced today is still subject to final court approval.

New York Attorney General Letitia James and New York Superintendent of Financial Services Linda Lacewell made the announcement.

Vision’s illegal and deceptive practices that were targeted against New York’s most vulnerable residents will finally be put to an end,” said Attorney General James.Owning a home is what millions of New Yorkers dream of, but Vision turned that dream into a nightmare. Not only are we shutting down this company’s illegal New York racket, but we are securing restitution for the many victims and are ensuring 58 families have their mortgage debts wiped away. A fair and transparent housing market is essential for the health, welfare, and economic stability of New York and its residents, which is why my office will never stop fighting to hold companies responsible for their deceptive actions. I want to thank Superintendent Lacewell and her team at DFS for their partnership and diligent work throughout this case.”

Vision property management stole from hundreds of New Yorkers who sought the American dream of homeownership,” added Superintendent Lacewell. “This settlement holds Vision accountable for their illegal actions and provides a measure of restitution to New Yorkers who were victimized by Vision’s predatory practices. This is a clear message that New York has zero tolerance for those who rely on deception and fraud to turn a profit, and I commend Attorney General James and the staff of both DFS and the Attorney General’s office for their hard work on this important matter.”

In August 2019, Attorney General James and Superintendent Lacewell reached a settlement with New York-based hedge fund Atalaya Capital Management LP, for its role in funding and assisting Vision and its affiliates in their illegal business. Under that settlement, Atalaya paid New York $250,000 in civil penalties, agreed to abide by injunctive terms intended to prevent future wrongdoing, and paid more than $2.5 million in restitution to consumers, which is now being distributed to more than 100 New York homeowners in the form of monetary payments and payment cancellation.

This matter was handled by Assistant Attorney General Noah Popp of the Consumer Frauds and Protection Bureau, under the supervision of Bureau Chief Jane M. Azia and Chief Deputy Attorney General for Social Justice Meghan Faux. The Bureau of Consumer Frauds and Protection is overseen by Chief Deputy Attorney General for Economic Justice Christopher D’Angelo and First Deputy Attorney General Jennifer Levy.

Additional attorneys handling this matter for the Department of Financial Services included Deputy Superintendent Peter C. Dean and Supervising Attorney in the Consumer Protection and Financial Enforcement Division Cynthia M. Reed.

Saoud “Sam” Rihan, 59, Bronx, New York, admitted today his participation in a conspiracy to carry out a $3.5 million scheme to use bogus 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:

Rihan was a business partner of Simon Curanaj, 65, Yonkers, New York. From 2012 through January 2014, Rihan, Curanaj, and others conspired to fraudulently obtain multiple home equity lines of credit (HELOC) from banks on residential properties in New Jersey and New York.

In 2013, Rihan and Curanaj executed a deed to transfer ownership of a Bronx, New York property to people identified in the complaint as “Individual 1” and “Individual 2,” neither of whom lived at the property. Rihan offered Individuals 1 and 2 $10,000 cash payments for acting as straw borrowers but never paid them. Rihan and Curanaj then applied for three HELOCs valued at $750,000 from multiple banks in the name of Individual 2.

Rihan and Curanaj hid the fact that the same Bronx, New York property was pledged as collateral in all three applications. The applications also fraudulently inflated Individual 2’s income. In addition, at the time the applications were made, the value of the Bronx property, which was encumbered by a mortgage, was far less than the amount of the HELOC loans that Rihan and the real estate broker applied for.

The victim banks eventually issued loans to Individual 2 in excess of $370,000. After the victim banks funded the HELOCs and deposited money into Individual 2’s bank accounts, Individual 2 disbursed almost all of the funds to Rihan, Curanaj, and others. In 2014, Individual 2 defaulted on all the HELOC loans.

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

Rihan faces a maximum potential penalty of 30 years in prison and a $1 million fine, or twice the gross gain or loss from the offense. Sentencing is scheduled for March 25, 2020.

Curanaj previously pleaded guilty to his role in the scheme and is awaiting sentencing.

Rihan pleaded guilty before U.S. District Judge John Michael Vazquez to an indictment charging him with one count of conspiracy to commit bank fraud.

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 (FHFA-OIG), under the direction of Special Agent in Charge Robert Manchak in Newark; and special agents of the FBI, under the direction Special Agent in Charge Gregory W. Ehrie in Newark, with the investigation leading to today’s guilty plea.

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-OIG.

Defense Counsel: Jeffrey Garrigan Esq., Jersey City, New Jersey

 

Paul Mangione, a former Deutsche Bank executive, has reached agreement, with the United States to settle a civil action filed in September 2017 in which the United States sought civil penalties for Mangione’s conduct in connection with Deutsche Bank’s marketing and sale of two residential mortgage-backed securities (RMBS) in 2007.

The complaint in the action, United States v. Paul Mangione, alleged that Mangione, a former Managing Director and head of subprime trading at Deutsche Bank, engaged in a scheme to defraud investors in two Deutsche Bank RMBS, ACE 2007-HE4 and ACE 2007-HE5, by misrepresenting the characteristics of the loans backing the two securities and misleading potential investors about the loan origination practices of Deutsche Bank’s wholly-owned subsidiary, DB Home Lending LLC (f/k/a Chapel Funding, LLC), which originated a number of the loans backing the two RMBS.  The complaint stated claims for relief under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), based on mail fraud and wire fraud.

The agreement provides for payment of $500,000 in civil penalties in exchange for dismissal of the complaint.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, announced the settlement.

This Office’s settlement with a bank executive in connection with RMBS fraud reflects our commitment to holding individuals accountable for their role in corporate fraud,” stated United States Attorney Donoghue.  Mr. Donoghue thanked the Federal Housing Finance Agency’s Office of the Inspector General for its assistance in conducting the investigation in this matter.

The settlement agreement does not constitute an admission by Mangione of any of the facts or of liability or wrongdoing by Mangione, and there has been no trial or adjudication or judicial finding of any issue of fact or law.

The government’s case was handled by Assistant United States Attorney Edward Newman.

To report RMBS fraud, go to: http://www.stopfraud.gov/rmbs.html.

E.D.N.Y. Docket No. 17-CV-5305 (NMG/RL)

Two comment letters urging the Consumer Financial Protection Bureau (CFPB) not to adopt two new rules, which would undermine the ability to enforce fair lending laws and prevent discrimination against communities of color in the mortgage lending market, were submitted by New York Attorney General Letitia James.

Fair lending laws are essential to protecting consumers from discriminatory lending practices,” said Attorney General James. “Both of CFPB’s proposed rules would undermine our ability to hold bad-acting lenders responsible for their actions. My office is committed to keeping provisions in place to ensure that almost a century of racism in mortgage lending is eradicated and that all Americans have access to sustainable homeownership.”

The first letter, signed by 13 attorneys general, challenges a May 2019 CFPB proposal limiting the data financial institutions are required to report to the CFPB under the Home Mortgage Disclosure Act (HMDA), a 1975 law that requires mortgage lenders to make certain mortgage data publicly available as a check to ensure compliance with fair lending laws. Some of this data includes information which lenders already collect to comply with other regulations as well as their own underwriting standards.

Now, the CFPB is soliciting comments on which data fields should be eliminated from reporting. By hiding important data points, the CFPB gives a windfall to financial institutions who will be able to resume predatory lending practices, and it will impede the government’s efforts to prevent another financial crisis brought about by predatory lending.

The second letter focuses on the state specific impact regarding another May 2019 CFPB proposal to the reporting threshold for mortgage lenders under HMDA. A preliminary review of the 2018 data shows that even with a slight increase to the threshold limit, New York loses essential data pertaining to local lending, or lenders that lend in one city or town.

By increasing the HMDA reporting threshold, the CFPB makes it difficult for the public and public officials to bring disparate impact discrimination claims, a decades-old theory of liability that has been instrumental in ending discrimination. If adopted, the changes in reporting thresholds would exempt large swaths of the mortgage lending industry from the obligation to report HMDA data.

With these two proposed rule changes, the CFPB fails to take into consideration the negative impact the relaxed reporting requirements will have on the ability to analyze local lending practices and hold lenders accountable for violations of fair lending laws.

New York Attorney General James argues that these changes undermine the core functions of the HMDA. The Attorney General also criticized the CFPB for reversing its prior position that such higher thresholds and the absence of certain data points would impede the public and public officials’ ability to ensure that mortgage lending was being conducted in a non-discriminatory manner in their communities. In addition to these substantive challenges to the CFPB’s proposed rule regarding the increased thresholds, the New York Attorney General James also maintains that it violates the Administrative Procedure Act since it fails to take into the consideration the cost of the proposed rule on the states.

Joining the New York Attorney General James in signing the first letter challenging the proposed rule to limit the data lenders are required to report to the CFPB are the attorneys generals of California, Connecticut, Delaware, District of Columbia, Hawaii, Illinois, Massachusetts, Michigan, Minnesota, Oregon, Pennsylvania, and Rhode Island.

 

Jordan Horsford, 29, East New York, Brooklyn was sentenced today to five months in jail and five years’ probation for stealing and attempting to sell the home of his 85-year-old neighbor, a diabetic man for whom the defendant was a part-time caretaker.

According to the investigation, in August 2016 the defendant, who was known to do odd jobs in the neighborhood, began helping the victim as needed, including carrying his wheelchair up steps and helping him get in and out of vehicles; he was paid for each task by the victim’s family.

In April 2017, the victim’s family began paying the defendant $400 a week to accept Meals on Wheels deliveries and set them out for the victim, to make sure he took his medicine and to check in on him at night.

Between June 19, 2017 and November 1, 2017, the defendant convinced the victim to sign away the deed to his home on Barbey Street, East New York, Brooklyn. The defendant told the victim he risked losing his home if he did not sign a document, and had the document notarized by a notary. The defendant then realized he needed another document notarized, but the notary refused so the defendant cut and pasted her original signature. He then recorded the deed, which had been signed over to him.

Finally, the defendant attempted to sell the house almost immediately after securing the deed, but a title company suspected foul play and refused to insure the home. The would-be purchaser then reached out to the 85-year-old victim’s family. At around the same time, the victim’s daughter, while going through her father’s mail, found a letter from the Department of Finance notifying them about documents filed relating to the property. The daughter pursued the matter with the DOF and the case was ultimately referred to the Brooklyn District Attorney’s Office for further investigation and prosecution.

Brooklyn District Attorney Eric Gonzalez made the announcement.

District Attorney Gonzalez said, “With today’s sentencing this defendant is being held accountable for preying on his elderly neighbor and abusing his trust. I urge seniors and their family members to protect their homes, especially as property values continue to rise in Brooklyn, by taking care not to sign any documents pertaining to their properties without the advice of a reputable attorney. I remain committed to prosecuting deed thefts like this and assisting all homeowners whenever possible.”

The defendant pleaded guilty to third-degree grand larceny in June and consented to an order nullifying the fraudulent recorded deed. http://www.mortgagefraudblog.com/?s=Jordan+Horsford

The case was prosecuted by Senior Assistant District Attorney Karen Turner of the District Attorney’s Frauds Bureau, under the supervision of Assistant District Attorney Gavin Miles, Counsel to the Frauds Bureau, and the overall supervision of Assistant District Attorney Patricia McNeill, Deputy Chief of the District Attorney’s Investigations Division.

 

Iskyo Aronov (also known as “Isaac Aronov”), 32, Miami, Florida, Michael Konstantinovskiy (also known as “Michael Kay”), 33, Rego Park, Queens, Tomer Dafna, 48, Great Neck, New York, Avraham Tarshish, 40, Queens Village, New York and Michael Herskowitz, 40, Brooklyn, New York have been indicted for conspiracy to commit wire fraud and bank fraud, and related wire fraud counts, in connection with a scheme to defraud mortgage lenders, including the Federal National Mortgage Association (“Fannie Mae”), the Federal Home Loan Mortgage Corporation (“Freddie Mac”) and borrowers.

According to the indictment, between December 2012 and January 2019, the defendants conspired to defraud mortgage lenders, misleading them into approving short sale transactions at fraudulently depressed prices.  In a short sale, with the approval of the mortgage lender or servicer, a mortgage loan borrower sells his or her property for less than the outstanding balance of the mortgage loan.  The proceeds from the short sale, less approved closing costs, are applied to the outstanding mortgage loan balance owed to the lender, who typically agrees to forgive the borrower’s remaining mortgage loan balance.  Here, the defendants fraudulently manipulated the short sale process by transferring properties for prices well above the short sale prices, and failing to disclose this to the mortgage lenders and servicers.  The defendants also took steps to preclude other prospective purchasers from making higher offers for properties by failing to market properties as required by the lenders, and by filing fraudulent liens on properties.

As a further part of the scheme, the defendants provided the mortgage lenders and servicers with false and misleading information in transaction documents and failed to disclose either payments made to the borrower and others related to short sale or contemporaneous agreements to transfer the properties at inflated prices.  Many of the affected mortgage loans were insured by the Federal Housing Administration, or owned or guaranteed by Fannie Mae or Freddie Mac.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, Robert Manchak, Special Agent-in-Charge, Federal Housing Finance Agency, Office of Inspector General, Northeast Region (FHFA-OIG), and Christina Scaringi, Special Agent-in-Charge, U.S. Department of Housing and Urban Development, Office of the Inspector General, Northeast Region (HUD-OIG), announced the charges.

As alleged, the defendants defrauded mortgage loan holders out of millions of dollars, with taxpayers saddled with much of the loss,” stated United States Attorney Donoghue.  “This Office will continue working with our law enforcement partners to vigorously prosecute those who commit mortgage fraud and enrich themselves at the expense of the financial institutions and government programs that insure or guarantee the loans.”  Mr. Donoghue thanked the United States Department of Homeland Security, Homeland Security Investigations, New York Field Office (HSI), the HSI El Dorado Financial Crimes Task Force and the Internal Revenue Service, Criminal Investigation, New York, for their assistance in the ongoing investigation.

Together with our partners in law enforcement, we have disrupted a scheme to defraud Fannie Mae and Freddie Mac. As demonstrated by this indictment, FHFA-OIG will investigate and hold accountable those who seek to victimize the government-sponsored entities supervised and regulated by FHFA,” stated FHFA-OIG Special Agent-in-Charge Manchak.

These five individuals allegedly engaged in a scheme of wholesale deception when they provided false, misleading, and incomplete information to lending institutions, borrowers, and the Federal Housing Administration (FHA) causing millions of dollars in damages to the FHA, which typically results in higher premiums being charged to future first-time homeowners,” stated HUD-OIG Special Agent-in-Charge Scaringi.  “What makes their alleged crimes even more egregious was their artificial devaluation of properties that, when resold or ‘flipped,’ resulted in large profits.  Many of these homes were located in economically challenged areas of New York where affordable housing is at a premium.”

Konstantinovskiy, Dafna, Tarshish and Herskowitz were arrested this morning in New York, and will be arraigned this afternoon before United States Magistrate Judge Lois Bloom.  Aronov was arrested in Florida, and will appear this afternoon for a removal hearing at the federal courthouse in Miami.

The charges in the indictment are allegations, and the defendants are presumed innocent unless and until proven guilty.  If convicted, the defendants each face a maximum of 30 years’ imprisonment and a $1 million fine.

The case is being handled by the Office’s Business and Securities Fraud Section.  Assistant United States Attorney Shannon C. Jones is in charge of the prosecution.  Assistant United States Attorney Tanisha Payne of the Office’s Civil Division is handling forfeiture matters.