Archives For Mortgage Fraud

Simon Curanaj, 67, Yonkers, New York, was sentenced today to 24 months in prison for his role 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, Curanaj, Michael 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, Curanaj, Arroyo, and others transferred ownership of the property to an individual living at the property and his family friend.

Curanaj, 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 Curanaj, 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 Curanaj, Arroyo, and others. Eventually, the family friend defaulted on the two HELOC loans. The overall scheme resulted in $2.2 million in losses to the victim banks.

In addition to the prison term, Judge Vazquez sentenced Curanaj to five years of supervised release and ordered him to pay $2.1 million in restitution. Arroyo was sentenced in September 2018 to 21 months in prison for his role in the scheme.

Curanaj previously pleaded guilty to an information charging him with conspiracy to commit bank fraud. Judge Vazquez imposed the sentence by videoconference today.

Acting U.S. Attorney Rachael A. Honig made the announcement.

Acting U.S. Attorney Honig credited special agents of the Federal Housing Finance Agency (FHFA) – Office of Inspector General, under the direction of Special Agent in Charge Robert Manchak in Newark, and special agents of the FBI, under the direction of Special Agent in Charge George M. Crouch in Newark, with the investigation leading to today’s sentencing.

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.

 

Steve Young Kang, aka “Steven Young Kang” and “Young Tae Kang,” 66, Ridgefield, New Jersey, was sentenced today to 18 months in prison for his role in a multi-year scheme to defraud financial institutions and others for a Short Sale Fraud Scheme.

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

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

From June 2013 to January 2017, Kang, who owned and controlled two real estate brokerages, sold his own properties and recruited others to sell properties in fraudulent short sales to a co-schemer, Mehdi Kassai. The co-schemers convinced financial institutions to agree to short sales and to accept less than the properties were worth through false documents, straw buyers, and cosmetic damage to properties. Kang, as a listing broker, also prevented legitimate and higher offers from being made by artificially limiting the ability of others to bid on and buy properties. Kassai then sold the properties to third-parties at a substantial profit. Kang defrauded financial institutions and others of at least $2.7 million.

In addition to the prison term, Kang was sentenced to three years of supervised release and ordered him to forfeit $835,248 in proceeds of the scheme. Restitution will be determined at a later date.

Kang previously pleaded guilty before U.S. District Judge William J. Martini to an information charging him with one count of bank fraud and one count of wire fraud. Judge Martini imposed the sentence today in Newark federal court.

Rahul Agarwal, Attorney for the United States in this matter, announced.

Attorney for the United States Agarwal credited special agents of the Federal Housing Finance Agency, Office of Inspector General, under the direction of Special Agent in Charge Robert Manchak, special agents of the U.S. Department of Homeland Security Investigations, under the direction of Special Agent in Charge Jason J. Molina, and the Bergen County Prosecutor’s Office, under the direction of Prosecutor Mark Musella, with the investigation leading to today’s sentencing.

The government is represented by Special Assistant U.S. Attorneys Charlie L. Divine and Kevin V. Di Gregory of the Federal Housing Finance Agency, Office of Inspector General.

 

Ronald J. Mccord, 70, Oklahoma City, Oklahoma pleaded guilty yesterday to defrauding two locally-based banks, Fannie Mae, and others through a broad range of fraudulent conduct over the course of three years.

McCord was the Chairman and founder of First Mortgage Company, LLC (“FMC”), an Oklahoma City, Oklahoma based mortgage lending and loan servicing company.

According to court documents and yesterday’s plea hearing, McCord admitted to defrauding Spirit Bank (“Spirit”) and Citizens State Bank (“Citizens”)—two state-chartered financial institutions—as well as their respective residential mortgage subsidiaries, American Southwest Mortgage Corporation (“Mortgage Corp.”) and American Southwest Mortgage Funding Corporation (“Funding Corp.”).  An independent audit discovered that McCord had sold more than $14,100,000.00 in Spirit/Mortgage Corp. and Citizens/Funding Corp. loans “out of trust” by failing to repay Spirit/Mortgage Corp. when certain Spirit/Mortgage Corp.-initiated loans were refinanced or otherwise paid off.  At the time of this discovery, FMC carried outstanding balances of about $200,000,000.00 and $140,000,000.00 on the Spirit/Mortgage Corp. and Citizens/Funding Corp. lines of credit, respectively.

Upon learning of McCord’s conduct, Spirit/Mortgage Corp. and Citizens/Funding Corp. terminated future warehouse lending to FMC, and instituted new notification requirements that required McCord to assign FMC-funded mortgages to Spirit/Mortgage Corp. and Citizens/Funding Corp., to ensure the title companies handling those mortgages sent payoffs directly to the banks.  McCord admitted at yesterday’s plea hearing that he filed the assignments as required, but then caused the mortgages to be released on two properties—in Leland and Denver, North Carolina—after collecting the mortgage payoffs.

Spirit/Mortgage Corp. and Citizens/Funding Corp.’s refusal to fund new FMC mortgages prompted McCord to seek out a new warehouse lender.  In early 2017, McCord began negotiating with CapLOC, LLC, a North Carolina-based mortgage lending business, and offered to sell FMC’s mortgage lending business in exchange for quick funding from CapLOC.  At yesterday’s plea hearing, McCord admitted that he made a materially false statement and representation to CapLOC in the course of those negotiations, in order to influence CapLOC’s actions.

Finally, in 2017, FMC serviced approximately 12,000 loans worth a total of approximately $1,800,000,000.00 for the Federal National Mortgage Association (“Fannie Mae”).  McCord admitted at the plea hearing that he defrauded Fannie Mae by diverting escrow monies intended to pay homeowners’ taxes and insurance premiums to cover FMC’s operating expenses.  McCord also admitted that he then laundered the proceeds by causing a wire transfer from FMC’s operating account to a custom home builder, as payment towards construction of McCord’s home in Colorado.

At sentencing, which is currently scheduled for August 9, 2021, McCord faces up to 30 years in prison and a fine of up to $1,000,000.00 on each count of bank fraud and false statement to a financial institution.  He also faces up to 10 years in prison and a $250,000.00 fine on the money laundering count.  Per the terms of his plea agreement, the government agreed not to advocate at sentencing for a sentence above 104 months.  Under the plea agreement, McCord will be ordered to pay restitution to the victims of his conduct in amounts to be determined by the court at the time of sentencing.  McCord must also forfeit proceeds of the fraudulent schemes and property involved in the offenses.  Further, as part of the plea agreement, the government will dismiss at sentencing the remaining counts of the Indictment.

On June 3, 2020, a grand jury returned a 24-count Indictment against McCord.  The charges included bank fraud, money laundering, and making a false statement to a financial institution.

The announcement was made by Acting U.S. Attorney Robert J. Troester.

This case is the result of investigations by the Federal Housing Finance Agency Office of the Inspector General, Federal Deposit Insurance Corporation Office of Inspector General, and the Federal Bureau of Investigation.  Assistant U.S. Attorney Julia E. Barry is prosecuting the case.

Reference is made to court filings for further information.

 

Edmundo Roman-Perez, 71, Sunset Park, Brooklyn, an attorney has been sentenced today to 1 to 3 years in prison for stealing approximately $280,000 in down payments he received to hold in escrow from two clients he represented in the sale of their homes. The defendant pleaded guilty to second-degree grand larceny in December 2020.

According to the investigation, in late 2018, a couple hired the defendant to represent them in the sale of their two-family, Sunset Park, Brooklyn home. The home sold for $1,350,000 and the defendant received a $135,000 down payment from the buyers that he should have held in his attorney escrow account until the date of closing, when the funds should have been released to his clients. Instead, the defendant used the money for his own benefit. After closing in March 2019, the defendant issued checks to his clients purporting to cover the $135,000 owed, which bounced upon deposit. The defendant failed to disburse the funds he owed to his clients.

Similarly, between November 2018 and April 2019, the defendant represented three brothers in the sale of their two-family home in Dyker Heights, Brooklyn. The home sold for $1,500,000 and the defendant received a $150,000 down payment from the buyers that he should have held in his attorney escrow account until closing, when he should have released the money to his clients. Instead, the defendant again used the money for his own benefit, and issued the brothers checks purporting to cover the funds owed to each of them. The checks bounced and the defendant failed to distribute the funds he owed to the brothers.

Additionally, the defendant was under indictment in Richmond County related to allegations that he stole client funds. In November 2020, he pleaded guilty to one count of third-degree grand larceny and received a sentence of 1 to 3 years in prison. The Brooklyn and Staten Island sentences will run concurrently.

Brooklyn District Attorney Eric Gonzalez made the announcement.

District Attorney Gonzalez said, “Today’s sentence holds this defendant accountable for the serious breach of trust and financial hardship he caused his victims. Let this serve as a reminder that I am committed to protecting Brooklyn’s residents from attorneys and other unscrupulous fraudsters who abuse their positions of authority to take advantage of those they are entrusted to advise and represent.”

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

The case was prosecuted by Senior Assistant District Attorney Katherine Zdrojeski of the District Attorney’s Public Integrity Bureau, under the supervision of Assistant District Attorney Laura Neubauer, Chief of the Public Integrity Bureau, 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.

Antoni Moszczynski, 67, Madison, New Jersey, an attorney has been arraigned today on an indictment in which he is charged with grand larceny for allegedly stealing approximately $239,500 in funds he received, and was not entitled to, while representing a client in the sale of her deceased sister’s estate.

According to the investigation, in December 2019, the defendant, an attorney who is currently licensed to practice law in New York, represented the victim in the sale of her property at 584 Leonard Street, Brooklyn, New York. The victim, who was appointed executrix of her deceased sister’s estate, entered contract of sale for $2.395 million.

It is alleged that on December 2, 2019, the defendant received a wired down payment from the buyer into his escrow account in the amount of $239,500. Furthermore, it is alleged that, within a week, the defendant transferred $210,000 into his personal bank account with Wells Fargo, and within three months had withdrawn or spent the remainder of the down payment.

The victim retained a different attorney to represent the estate at the closing, which took place on June 30, 2020. The defendant was allegedly not present at the closing and has not answered calls from the victim or her attorney. To date, the defendant has not given the victim or the estate the down payment he allegedly stole.

Moszczynski was arraigned in front of Brooklyn Supreme Court Justice Danny Chun on an indictment in which he is charged with second-degree grand larceny. He was released without bail and ordered to return to court on June 29, 2021.

Brooklyn District Attorney Eric Gonzalez today made the announcement.

District Attorney Gonzalez said, “This defendant allegedly abused his power and betrayed his client to steal hundreds of thousands of dollars to which he was not entitled and has not returned despite the victim’s repeated attempts to contact him. We will now seek to hold him accountable for this flagrant and brazen theft.

If you believe that you or someone you know is the victim of fraud or theft perpetrated by the defendant, please call the District Attorney’s Action Center at (718) 250-2340.

This case is being prosecuted by Senior Assistant District Attorney Sara Walshe of the District Attorney’s Public Integrity Bureau, under the supervision of Assistant District Attorney Laura Neubauer, Chief of the Public Integrity Bureau, 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.

An indictment is an accusatory instrument and not proof of a defendant’s guilt

 

Pilar Rose, 58, Fresno, California was charged today with bank fraud, tax evasion, obstructing an IRS tax audit, and aggravated identity theft.

According to court documents, Rose, who managed her husband’s orthodontics practice, committed bank fraud by submitting false financial information to obtain a $1.4 million home refinance and a loan for a BMW. She committed aggravated identity theft by using an acquaintance’s Social Security number for the latter loan.

Rose evaded over $400,000 in taxes in 2014 and 2015. She then altered and produced financial records to the IRS during an audit to make personal expenses appear to be deductible business expenses.

Acting U.S. Attorney Phillip A. Talbert made the announcement.

This case is the product of an investigation by the IRS Criminal Investigation. Assistant U.S. Attorney Joseph Barton is prosecuting the case.

If convicted of evading taxes, Rose faces a maximum penalty of five years in prison and a fine of up to $250,000. If convicted of obstructing an IRS audit, she faces a maximum penalty of three years in prison and a fine of up to $250,000. If convicted of bank fraud, she faces a maximum penalty of 30 years in prison and a fine of up to $1 million. If convicted of aggravated identity theft, she faces a penalty of two years in prison consecutive to any other sentence she may receive and a fine of up to $250,000. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

Seth Andrew, 42 has been charged with wire fraud, money laundering, and making false statements to a financial institution, in connection with a scheme in which Andrew stole $218,005 from a charter school network that he founded.

As alleged in the Complaint unsealed today[1]:

In 2005, Seth Andrew helped create “School Network-1,” a series of public charter schools then based in New York City, New York.  In the Spring of 2013, Andrew left School Network-1 and accepted a job in the United States Department of Education and, thereafter, as a senior adviser in the Office of Educational Technology at the White House.  While employed at the Department of Education, and at the White House, Andrew was paid by School Network-1.  In November 2016, Andrew left his role in the White House and, shortly thereafter, in January 2017, Andrew officially severed his relationship with School Network-1.

School Network-1 comprises several charter schools throughout United States including several in New York City.  Pursuant to an agreement with the New York State Board of Regents, School Network-1’s New York-based charter schools must maintain an “escrow account” that may be accessed only if the school dissolves.  Three such escrow accounts, for three New York City-based School Network-1 schools, were opened by Andrew and other School Network-1 employees at  “Bank-1” in 2009, 2011, and 2013.  As to each of those three accounts – Escrow Account-1, Escrow Account-2, and Escrow Account-3 – Andrew was a signatory and had access to the funds in them.  However, pursuant to the charter agreement, the funds in the Escrow Accounts were reserved in case the school dissolved, and the funds could not be moved by Andrew, or anyone, without proper authorization.

After he severed his relationship with School Network-1, on March 28, 2019, Andrew entered a Bank-1 branch in New York City and closed both Escrow Account-1 and Escrow Account-2.  Bank-1 provided Andrew a bank check in the amount of $71,881.23 made payable to “[School Network-1] Charter School” (“Check-1”) and a second bank check in the amount of $70,642.98 to “[School Network-1] Harlem Charter” (“Check-2”).  Check-1 and Check-2 represented the funds that were in Escrow Account-1 and Escrow Account-2, respectively.

The same day that Andrew closed Escrow Account-1 and Escrow Account-2, Andrew entered a Manhattan branch of a different FDIC-insured bank (“Bank-2”) and opened a business bank account in the name of “[School Network-1] Charter School” (“Fraud Account‑1”).  To open that account, Andrew represented to a Bank-2 employee that he was a “Key Executive with Control of” School Network-1 Charter School, which was a lie.  Andrew then deposited Check-1 into the account but, that day, Andrew did not deposit Check-2.

Five days later, on April 2, 2019, Andrew used an ATM machine in Baltimore, Maryland, to deposit Check-2 into Fraud Account-1.  It appears Andrew waited to deposit Check-2 because it was made payable to “School Network-1 Harlem Charter” and not “School Network-1 Charter School.”  Had he tried to deposit Check-2 when he opened Fraud Account-1 it would not have been honored by Bank-2.

At the time Andrew deposited Check-1 and Check-2 into a Bank-2 bank account, Andrew was contemplating obtaining a mortgage from Bank-2 to purchase a residential property.  At that time, Bank-2 offered certain customers, as a promotion, more favorable mortgage interest rates if those customers maintained a certain amount of funds in Bank-2 accounts.  Specifically, for every $250,000 on deposit, up to a total of $1 million, Bank-2 would lower that qualifying customer’s mortgage interest rate by 0.125%.  Thus, in total, if a qualifying customer maintained $1 million or more of his/her funds in Bank-2 accounts that customer would receive a 0.5% interest rate deduction on a Bank-2 mortgage.  But to take advantage of the interest rate deduction promotion, Bank-2 required that the funds a customer deposited be funds owned by the customer or, in some instances, a business the customer owned, controlled or was lawfully associated with.  Bank-2 did not permit a customer to utilize money owned by someone else to gain the benefit of the interest rate deduction promotion.

By April 2019, because of the $142,524 Andrew deposited in Bank-2, using the money he stole from two charter schools, Andrew deposited a total of approximately $1,007,716 with Bank-2, and therefore became eligible to receive a 0.5% interest rate deduction – the largest deduction a customer could receive from Bank-2’s promotion.  Without the $142,524 deposited stolen funds, Andrew would have been eligible for only a 0.375% interest rate deduction.  On August 21, 2019, Andrew purchased a residential property located in New York, New York, for approximately $2,368,000.  To effectuate that purchase, Andrew, and his spouse, obtained a mortgage from Bank-2 in the amount of $1,776,000 with an interest rate of 2.5% –  taking full advantage of the promotion Bank-2 offered.

On October 17, 2019, Andrew closed out Escrow Account-3 and received a check (“Check-3”) made payable to “[School Network-1] Endurance” in the amount of $75,481.10.

On October 21, 2019, Andrew deposited Check-3 into an account that he opened at a third bank (“Fraud Account-2”).  Approximately one month later, Andrew obtained a check from Bank-2 for $144,473.29, which constituted the funds stolen from Escrow Account-1 and Escrow Account-2, and Andrew ultimately deposited those funds into Fraud Account-2.  Five days later, Andrew rolled the funds in Fraud Account-2 into a certificate of deposit.  That certificate of deposit matured on May 20, 2020, which earned Andrew $2,083.52 in interest.  Andrew then transferred the funds from the certificate of deposit – including the funds stolen from the Escrow Accounts – into a bank account held in the name of a particular civic organization that Andrew currently controls, thereby concealing the money’s association with School Network-1, and depositing the stolen money into an account under Andrew’s complete control.

Audrey Strauss, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), made the announcement today

Manhattan U.S. Attorney Audrey Strauss said:  “As alleged, Seth Andrew abused his position as a founder of a charter school network to steal from the very same schools he helped create.  Andrew is not only alleged to have stolen the schools’ money but also to have used the stolen funds to obtain a savings on a mortgage for a multimillion-dollar Manhattan apartment.  Thanks to the FBI’s diligent work, Andrew now faces federal charges for his alleged scheme.”

FBI Assistant Director William F. Sweeney Jr. said:  “Locking into the lowest interest rate when applying for a loan is certainly the objective of every home buyer, but when you don’t have the necessary funds to put down, and you steal the money from your former employer to make up the difference, saving money in interest is likely to be the least of your concerns. We allege today that Andrew did just that, and since the employer he stole from was a charter school organization, the money he took belonged to an institution serving school-aged children. Today Andrew himself is learning one of life’s most basic lessons – what doesn’t belong to you is not yours for the taking.”

Andrew is charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison, one count of money laundering, which carries a maximum sentence of 20 years in prison, and one count of making a false statement to a bank, which carries a maximum sentence of 30 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Ms. Strauss praised the outstanding investigative work of the FBI.

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorney Ryan B. Finkel is in charge of the prosecution.

The charges in the Complaint are merely allegations, and the defendant is presumed innocent unless and until proven guilty.

[1] As the introductory phrase signifies, the entirety of the text of the Complaint, and the description of the Complaint set forth herein, constitute only allegations, and every fact described should be treated as an allegation.

 

Joseph A. Gonzalez, 46, Henderson, Nevada was sentenced today for his role in a scheme to use bogus information and simultaneous loan applications at multiple banks – known as “shot-gunning” – to attempt to obtain home equity lines of credit (HELOCs).

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

From 2010 through 2018, Jorge Flores and Simon Curanaj, a real estate broker in the Bronx 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.

Gonzalez and Flores used a property in Jersey City, New Jersey, as part of the scheme. Gonzalez had been allowed by the owner of the property to live there 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). Unbeknownst to the owner of the property, a “quitclaim” 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 Individual 1’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.

Gonzalez previously pleaded guilty before U.S. District Judge John Michael Vazquez to Count One of an indictment charging him with one count of conspiracy to commit bank fraud. Judge Vazquez imposed the sentence today by videoconference. Gonzalez is the sixth person to plead guilty as part of the scheme.

In addition to the prison term, Judge Vazquez sentenced Gonzalez to three years of supervised release and ordered him to pay restitution of $512,500.

Acting U.S. Attorney Rachael A. Honig made the announcement.

Acting U.S. Attorney Honig credited 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 FBI, under the direction of Special Agent in Charge George M. Crouch Jr. in Newark, with the investigation leading to today’s sentencing.

The government is represented by Jason S. Gould, Acting Chief of the Violent Crimes Unit, and Special Assistant U.S. Attorney Kevin DiGregory of the FHFA, Office of the Inspector General.

 

Nathanael Zimmerman, 40, Wyckoff, New Jersey, was arrested today on charges of engaging in mortgage fraud, fraudulently obtaining an SBA loan, and stealing another person’s identity

According to the complaint:

From August 2013 through January 2014, Zimmerman orchestrated a scheme to engage in mortgage fraud concerning Federal Housing Administration (FHA)-insured loans. Zimmerman aided individuals in applying for FHA-insured loans and caused fraudulent representations to be made to the lenders, including submitting false bank statements. Zimmerman received a portion of the loan proceeds. Later, these unqualified individuals defaulted on their loans, causing losses to the U.S. Department of Housing and Urban Development of more than $300,000.

In 2020 Zimmerman used his deceased brother’s identity to obtain a U.S. Small Business Administration (SBA) Economic Injury Disaster Loan (EIDL). Zimmerman received more than $150,000 by applying for EIDL funds in his brother’s name and using his brother’s personal identification information.

The charges of wire fraud affecting a financial institution and bank fraud are each punishable by a maximum potential penalty of 30 years in prison and a fine of $1 million, or twice the gross profits or twice the gross loss suffered by the victims, whichever is greater. The charge of aggravated identity theft is punishable by a mandatory consecutive term of imprisonment of two years in prison and a fine of $250,000, twice the gross profits or twice the gross loss suffered by the victims, whichever is greater.

Acting U.S. Attorney Rachael A. Honig made the announcement.

Acting U.S. Attorney Honig credited special agents of the FBI, under the direction of Special Agent in Charge George M. Crouch Jr., in Newark, and 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, with the investigation leading to today’s arrest.

The government is represented by Assistant U.S. Attorneys Sammi Malek and Andrew Kogan of the U.S. Attorney’s Office Criminal Division in Newark.

The charges and allegations contained in the complaint are merely accusations and the defendant is considered innocent unless and until proven guilty.

 

Stephen Sharkey, 51, Swedesboro, New Jersey, was sentenced to four years and one month in prison, three years of supervised release, for stealing down payments for homes from two different families.

In September 2020, the defendant pleaded guilty to two counts of conspiracy to commit wire fraud, eight counts of wire fraud, one count of aggravated identity theft and, one count of money laundering in connection with three brazen and predatory frauds which greatly harmed innocent victims and netted the defendant more than $385,000. Sharkey engaged in two mortgage-closing schemes to defraud potential home buyers – stealing money that the victims had intended to use to purchase residences for themselves and their families. In the third scheme, the defendant stole all of the proceeds of the sale of a house by secretly going to closing without telling the seller.

Sharkey and his associate, Antonio Ambrosio, convinced their victims to provide Sharkey with the down payment funds in advance of the dates set for the real estate closings, with the promise that Sharkey would provide full financing for the purchases. Rather than finance the deals, Sharkey and Ambrosio simply stole the down payment money supplied by the victims and made excuses when the deals did not close. As part of the scam, Sharkey and Ambrosio even defrauded Ambrosio’s own brother-in-law out of $208,000. After receiving this money, Sharkey immediately cut checks to ARMM Investments, LLC, a company owned by George Borgesi. Borgesi and Sharkey were both convicted in United States v. Merlino, et al., 99 CR 363, an early 2000s RICO case in which the Philadelphia La Cosa Nostra was named as the enterprise. Borgesi was named as a capo of the Philadelphia LCN in that Indictment, and Sharkey was identified as a bookmaker for the mob.

After Sharkey and Ambrosio stole the down payment from Ambrosio’s brother-in-law, they proceeded to lure a second victim to use Sharkey to finance his mortgage, and the victim wired Sharkey $100,000, which Sharkey promptly converted to his own use. The deal for this property fell through, but Sharkey and Ambrosio induced the victim to send the seller an extra $25,000 to hold the deal open, claiming Sharkey would get the deal done. The victim sent the seller the $25,000, but Sharkey had already disposed of the earlier $100,000 and the deal never closed.

Finally, in the real estate fraud perpetrated on the seller victim, Sharkey promised the victim that Sharkey would sell the house belonging to the estate of the victim’s deceased parents and, after going to a closing the victim knew nothing about, Sharkey deposited all of the proceeds of the sale into his own bank account, stealing over $52,000 from the victim in the process.

Sharkey was ordered to pay $296,000 restitution and to forfeit the same amount of money.

Acting United States Attorney Jennifer Arbittier Williams made the announcement.

Sharkey’s greed impacted the lives and security of multiple families, and his shameful actions had severe consequences for these innocent people,” said Acting U.S. Attorney Williams. “Not only did he and his associate steal mortgage down payments, but he also sold a different family’s house right out from underneath them and pocketed all of the cash. For his actions, he will now spend years in prison.

Real estate fraud was just the latest racket for Stephen Sharkey,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “He blatantly preyed on innocent victims here, destroying two families’ plans of buying homes and stealing a third person’s inherited property. A chunk of these fraudulent proceeds was diverted to a longtime Philadelphia mob figure, underscoring Sharkey’s continued association with organized crime. The FBI and our partners are going to keep investigating and locking up those committed to making money through illicit means.”     

This investigation once again reveals how members and associates of the Philadelphia La Cosa Nostra Organized Crime Family are constantly looking to make illicit financial gains by infiltrating legitimate business or exploiting regulatory rules as well as federal and state laws,” said Brandon Corby, Eastern Organized Crime Task Force Commander, Pennsylvania State Police. “The Pennsylvania State Police with our FBI partners are committed to eradicating this type of criminal behavior and hold those engaged in such activities accountable.”

The case was investigated by the Federal Bureau of Investigation’s Organized Crime Task Force and the Pennsylvania State Police, and is being prosecuted by Assistant United States Attorney Michael T