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Willis Edwards III, 49, formerly of East Orange, New Jersey, and currently of Lithonia, Georgia, the former acting business administrator for the Township of Orange, New Jersey, has been charged in a 28-count indictment with conspiracy, bribe-taking, money and property fraud, federal tax fraud, and making false statements in connection with a mortgage.

According to documents filed in this case:

In January 2015, Edwards had his friend, Franklyn Ore, from Urban Partners LLC (Urban Partners), using cash provided by Edwards, funnel to himself a stream of concealed kickbacks in exchange for Edwards’ official action as an Orange public official and assistance in the affairs of Orange and in violation of his duties in connection with:

  • A Saturday literacy program for which Orange and the Orange Public Library were awarded a $50,000 Community Development Block Grant, funded by the U.S. Department of Housing and Urban Development (HUD) and administered by Essex County, to provide tutoring services for low and moderate-income families (the Saturday Literacy Program);
  • A project for which an urban planning company located in Montclair, New Jersey, had received a one-year, $150,000 contract from Orange to provide professional economic planning services to analyze the conditions within the Central Orange Redevelopment Area (the “redevelopment project”); and
  • A project to acquire the Orange YWCA building and develop it into a community recreation center.

Making False Statements in Connection with a Mortgage

In 2014, Edwards also made false statements to obtain mortgage relief on a $248,000 30-year mortgage loan that he obtained in 2005 to purchase a residence in East Orange, New Jersey. As of February 11, 2014, Edwards had fallen substantially in arrears on his mortgage payments. On April 7, 2014, Edwards submitted a completed Request for Mortgage Assistance form to the mortgage servicer. Edwards disclosed that he was employed by Orange and falsely indicated that he did not have a second employer, when, at the time, he also was employed by a New Jersey County College at an annual salary of approximately $45,000. On October 8, 2014, Edwards and the mortgage servicer entered into a Home Affordable Modification Agreement. In reliance upon false representations made by Edwards, the mortgage servicer provided the following benefits, among others, to Edwards: (1) $95,590 of Edwards’s debt was forgiven between July 2015 and July 2017, and (2) the real estate property was taken out of foreclosure.

The Saturday Literacy Program Fraud and Kickbacks

Despite knowing that Urban Partners did not provide any services to the library in connection with the Saturday Literacy Program, Edwards caused false and fraudulent vouchers to be submitted in March 2015 and in May 2015 to Essex County seeking Saturday literacy grant funds for expenses purportedly paid to Urban Partners. In support of the fraudulent vouchers, Edwards had phony documents submitted to Essex County, including: (1) a sham contract between Urban Partners and the library, backdated to over six months before Urban Partners had been formed, (2) false statistical data about the children who supposedly attended the literacy sessions, (3) fake Urban Partners invoices, and (4) backdated library checks payable to Urban Partners that had not been negotiated when submitted to Essex County to give the false impression that the Library had paid Urban Partners, when it had not done so.

Between April 2015 and June 2015, Essex County provided the Library with $50,000 in HUD funds for the Saturday Literacy Program. Between May 2015 and August 2015, Edwards caused the library to pay Urban Partners approximately $36,000, despite knowing that Urban Partners had not provided the library with any services in connection with the Saturday Literacy Program. Edwards received kickbacks from Ore from the money paid to Urban Partners by the library. At Edwards’s direction, Ore also provided a portion of the proceeds from the library to an associate of Edwards. Ore spent the remaining proceeds for his own personal benefit.

The Redevelopment Project Fraud and Kickbacks

Edwards used his influence as an Orange public official to arrange for the planning company to hire Urban Partners after the planning company had received its contract with Orange. Ore provided services to the Planning Committee and, between August 2015 and February 2016, the planning company, which was receiving payments from Orange, paid Urban Partners $33,220. Edwards received kickbacks from Ore from the money that the planning company paid to Urban Partners.

The YWCA Project Fraud and Kickback

In December 2015, aware that his resignation as an Orange public official would become effective on December 31, 2015, Edwards took further steps to use his position for corrupt and fraudulent purposes. Edwards advised Ore that Edwards had access to Orange discretionary funds and wanted to use them by the end of the year. At Edwards’s instruction, Ore generated and submitted a fraudulent invoice from Urban Partners to Orange, billing Orange $16,800 for services purportedly related to the YWCA Project. Edwards, knowing that no services has been rendered, approved the issuance of a purchase order and Orange paid Urban Partners $16,800.  On December 30, 2015, Edwards received a substantial amount of the $16,800 in a kickback from Ore.

The Plagiarism Scheme

From June 2015 to June 2016, Edwards duped Orange into making payments to a consultant, which were, at least in part, for academic papers that the consultant arranged to have written for Edwards. Edwards, who was enrolled in a graduate program at a university in New Jersey, plagiarized the papers that Orange paid for and passed them off as his own work. Between December 2015 and March 2016, with Edwards’s approval, the consultant submitted three fraudulent invoices to Orange calling for payments of $12,000, $16,000, and $10,000 for purported professional services. Orange paid the money to the consultant and Edwards received from the consultant academic papers that had been written for him. On June 20, 2016, Edwards submitted several papers which were virtually identical to the papers that he had received from the consultant. In emails to the professors, to which the papers were attached, Edwards asked the professors to grade the attached outstanding assignments so that he did “not receive a failing grade for all of the hard work that [he had] done.”

The Graduate School Payments Scheme

The indictment also charges Edwards with fraud in connection with funding his graduate studies. Between December 2015 and July 2016, Edwards engaged in a scheme to defraud Orange of $25,142 in payments to himself and University 1 related to Edwards’s graduate courses there and at another university in New Jersey through the use of a fraudulent approval memorandum. In February 2016, when Edwards was no longer an Orange public official, he dictated the following language to an employee in Orange’s Finance Department (Orange Employee 1) for use in a fraudulent approval memorandum addressed to Edwards: “As per the employee handbook, this memorandum serves as consent for you [Edwards] to enroll in the courses as discussed. Please forward the invoices to process for payment.” Edwards instructed Orange Employee 1 to backdate the memorandum to Aug. 17, 2015, to give the false impression that Edwards had received approval for Orange to pay for academic courses in which he had enrolled.

On February 10, 2016, at Edwards’s direction, Orange Employee 1 sent an email to a senior public official in the office of the Mayor of Orange (Orange Employee 2) containing a draft of the fraudulent approval memorandum. Orange Employee 2 later provided Orange Employee 1 with a final copy of the fraudulent approval memorandum on Orange letterhead, purportedly from the Mayor of Orange, addressed to Edwards, and backdated to August 17, 2015. It included the language that Edwards dictated to Orange Employee 1 and bore the stamp of the initials of the Mayor of Orange to give the false impression that the Mayor of Orange had approved Edwards’s reimbursement for the courses, when the Mayor of Orange had not done so.

Federal Tax Fraud

Edwards also caused a false 2015 federal tax return to be filed with the IRS. From January 2016 to April 15, 2016, Edwards conspired with his tax return preparer, Zenobia Williams, to defraud the United States and the IRS by claiming bogus labor expenses of $27,055 for his business, Natural Care Municipal Cleaning Services LLC (Natural Care), on that tax return. In addition to falsifying business expenses, Edwards also underreported Natural Care’s income. He reported $40,000 in gross receipts, when Natural Care actually received approximately $52,000 in payments from a New Jersey law firm and approximately $32,500 in payments from a local Board of Education. Edwards also did not report the ill-gotten gains that he obtained in 2015 in connection with the Saturday Literacy Program, the Redevelopment Project, and the YWCA Project.

The charges carry the following maximum potential penalties:

Offenses Charged Maximum Term of Imprisonment Maximum Fine
False statement concerning a mortgage 30 years $1,000,000
Conspiracy to commit wire fraud or wire fraud and mail fraud 20 years $250,000
Wire fraud 20 years $250,000
Mail fraud 20 years $250,000
Theft from a federally-funded local government 10 years $250,000
Bribery in connection with the business of a federally funded local government 10 years $250,000
Conspiracy to defraud the United States and the IRS Five years $250,000
Subscribing to a false tax return Three years $250,000
     

On January 13, 2020, Ore entered a guilty plea to an information charging offenses related to the Saturday Literacy Program, the Redevelopment Project, and the YWCA Project. On February 13, 2020, Timur Davis, the former Executive Director of the Orange Library, entered a guilty plea to an information charging an offense related to the Saturday Literacy Program and another HUD-funded program to replace an HVAC/Chiller unit at the Library. On December 30, 2019, Williams entered a guilty plea to conspiring to defraud the United States and the IRS.

Edwards was charged with 14 counts of wire fraud, two counts of bribery in connection with the business of a federally funded local government, two counts of theft from a federally funded local government, two counts of mail fraud, two counts of false statements concerning a mortgage, one count of bribery in connection with the business of a federally funded local government and organization, one count of theft from a federally funded local government and organization, one count of conspiracy to commit wire fraud, one count of conspiracy to commit wire fraud and mail fraud, one count of conspiracy to defraud the United States and the IRS, and one count of filing a false tax return. A date for Edwards’ arraignment has not yet been scheduled.

U.S. Attorney Craig Carpenito made the announcement.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Acting Special Agent in Charge Joe Denahan in Newark; 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; and special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Michael Montanez with the investigation leading to the charges.

The government is represented by Assistant U.S. Attorneys Cari Fais and J Fortier Imbert of the U.S. Attorney’s Office’s Special Prosecutions Division.

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

Blanca A. Medina, 54, Manalapan, New Jersey, pleaded guilty today, admitting her role in a scheme to defraud a financial institution of hundreds of thousands of dollars.

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

From 2015 to 2018, Medina conspired with others to fraudulently obtain mortgage loans from “Mortgage Lender A” in Monmouth County to finance the purchase of properties by unqualified buyers. Applicants for mortgage loans are required to list their assets and income on their mortgage loan applications, and mortgage lenders rely on those applications when deciding whether to issue mortgage loans.

Medina, a former loan officer for Mortgage Lender A, admitted to participating in a conspiracy in which she knowingly caused completed mortgage loan applications that contained multiple misrepresentations of material facts regarding the buyers’ assets and income to be submitted to Mortgage Lender A. A conspirator provided Medina with false and fraudulent documents for potential borrowers including false and fraudulent lease agreements, bank statements, and a gift check and gift letter. Based on these lies, Mortgage Lender A issued mortgage loans to unqualified buyers, which caused Mortgage Lender A hundreds of thousands of dollars in losses.

The conspiracy charge to which Medina pleaded guilty carries a maximum of 30 years in prison and a $1 million fine. Sentencing is scheduled for October 20, 2020.

U.S. Attorney Craig Carpenito made the announcement.

Medina was charged before U.S. District Judge Stanley R. Chesler in Newark federal court to a one-count information charging her with conspiracy to commit bank fraud.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Acting Special Agent in Charge Douglas Korneski in Newark, and Special Agents of the Federal Housing Finance Agency, Office of Inspector General, under the direction of Special Agent in Charge Robert Manchak, with the investigation leading to today’s guilty plea.

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

Isaac DePaula, 40, Brazil, was arrested this morning for his role in a long-running mortgage fraud scheme based in New Jersey.

DePaula was charged by complaint in 2012, indicted in 2016, and has been a fugitive. He returned via Newark Liberty International Airport this morning to face a four-count indictment charging him with conspiracy to commit bank fraud and three counts of bank fraud.

According to documents filed in this and other cases and statements made in court:

From September 2006 to May 2008, DePaula and his conspirators engaged in a long-running, large-scale mortgage fraud conspiracy through a company called Premier Mortgage Services (PMS). The conspirators targeted properties in low-income areas of New Jersey. After recruiting straw buyers, the conspirators used a variety of fraudulent documents to make it appear as though the straw buyers possessed far more assets, and earned far more income, than they actually did. The conspirators then submitted these fraudulent documents as part of mortgage loan applications to financial institutions. Relying on these fraudulent documents, financial institutions provided mortgage loans for the targeted properties. The conspirators then split the proceeds from the mortgages among themselves and others by using fraudulent settlement statements (HUD-1), which hid the true sources and destinations of the mortgage funds provided by financial institutions. In reality, the straw buyers had no means of paying the mortgages on the properties, many of which entered into foreclosure proceedings.

DePaula was a loan officer at PMS and recruited straw buyers, provided false and fraudulent documents to the straw buyers, and incorporated false and fraudulent documents into loan applications to induce financial institutions to fund mortgage loans. The loan officers profited illegally by receiving a commission from PMS for each mortgage loan that they closed, and also profited illegally by diverting portions of the fraudulently obtained mortgage proceeds for themselves, often via shell corporations or nominee bank accounts.

DePaula faces a maximum potential penalty of 30 years in prison and a fine of $1 million per count. His co-defendant, Rodrigo Costa, remains at large. All of the remaining conspirators have previously pleaded guilty and been sentenced for their roles in the scheme.

DePaula made his initial appearance before U.S. Magistrate Judge James B. Clark III in Newark federal court and was released on his own recognizance.

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; special agents of the IRS, under the direction of Special Agent in Charge John R. Tafur; and special agents of the Federal Housing Finance Agency’s Office of the Inspector General, under the direction of Special Agent in Charge Robert Manchak, for the investigation leading to today’s arrest.

The government is represented by Assistant U.S. Attorneys Rahul Agarwal and Zach Intrater.

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

Defense counsel: Joshua Cohn Esq., Saddle Brook, New Jersey

 

Shenandoah Adams Sr., a/k/a “Shane Adams Sr.,” 54, New Providence, New Jersey, was charged today by indictment with six counts of wire fraud and two counts of making false statements in connection with a mortgage loan.

According to the indictment:

Adams was a principal of Adams Property Management and Investment Group Limited Liability Company (Adams Property Management), which purchased property on Hilton Street, East Orange, New Jersey, in 2014. The following year, Adams arranged for a close associate (Individual 1) to obtain a $153,562 loan from a mortgage lender to purchase the Hilton Street property from Adams Property Management. Adams knew that Individual 1 did not have the money to pay the balance of the purchase price of $225,000. At the closing on March 25, 2015, Adams directed Individual 1 to issue a fraudulent check in the amount of $90,280.47 (the balance of the purchase price) to give the false impression that Individual 1 had paid the closing balance. Adams reassured Individual 1 that Adams would not negotiate the check. Adams signed a settlement statement, falsely certifying that Individual 1 paid the closing balance and that the settlement statement was a true and accurate statement of all receipts and disbursements made in connection with the sale of the Hilton Street property, when Adams knew that Individual 1’s check was fraudulent. Adams used Individual 1’s loan proceeds to pay off Adams Property Management’s $100,000 mortgage loan to purchase the Hilton Street Property and to obtain a $26,335.30 check for Adams Property Management.

Although Adams reassured Individual 1 that Adams would fund Individual 1’s mortgage payments, by May 2016 Individual 1’s mortgage payments on the Hilton Street property were substantially in arrears. Adams arranged for Individual 1 to sell the property to another associate for a price of $255,000. The closing on that sale commenced on May 31, 2016; the total amount to pay off Individual 1’s mortgage was $210,565.34. On June 1, 2016, Adams and Individual 1 had a telephone conversation with an out-of-state representative of the mortgage servicer for Individual 1’s lender, during which Adams made false and fraudulent statements to induce the lender to reduce the payoff amount. The lender agreed to reduce Individual 1’s payoff amount to $190,000. At Adams’s direction, Individual 1 cashed the check for the amount of the reduction, $20,665.34, and delivered the cash proceeds to Adams.

Adams also was a principal of VH Electrical and Plumbing Limited Liability Company (VH). On March 11, 2015, Adams, on behalf of VH, entered into a contract with the Orange Public Library to replace the library’s HVAC/Chiller unit for a price of $49,000. The project was funded by a U.S. Department of Housing and Urban Development (HUD) Community Development Block Grant to the library and Orange.

Before getting the contract with the library, Adams sent the library’s executive director, Timur Davis, two fake quotes purportedly from two vendors to give the false impression that VH would replace the library’s chiller for less than those other vendors. After VH had been hired, Adams sent Davis records to give the false impression that Adams was taking steps to order a replacement chiller. Adams received $40,000 from the library, but did not replace the chiller. Davis pleaded guilty on Feb.13, 2020 to making false statements to HUD in connection with the project.

He is scheduled to appear this afternoon before U.S. Magistrate Judge Leda Dunn Wettre in Newark federal court.

The charges of wire fraud carry a maximum potential penalty of 20 years in prison and a maximum $250,000 fine. The charges of making false statements in connection with a mortgage application carries a maximum potential penalty of 30 years in prison and a maximum potential fine of $1 million.

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; 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; 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 arrest.

The government is represented by Assistant U.S. Attorneys J Imbert and Cari Fais of the U.S. Attorney’s Office’s Special Prosecutions Division.

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

Defense counsel: TBD

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

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

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

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

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

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

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

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

 

Cabral Simpson, 43, Belleville, New Jersey, was arraigned today on charges that he engaged in a conspiracy to commit mortgage fraud that resulted in potential losses in excess of $1 million.

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

Simpson, a real estate investor, and his conspirators engaged in mortgage fraud by creating fake bank statements and fake employee verification records for buyers of properties and transferring money into the buyers’ bank accounts for payment of the deposit for a property. Simpson and his conspirators submitted fraudulent mortgage loan applications, supporting documents, and closing documents on behalf of the buyers. They induced lenders to issue more than $1 million in loans, resulting in defaults and exposing the lenders and the U.S. Department of Housing and Urban Development to more than $1 million in potential losses. 

The conspiracy and wire fraud counts with which Simpson is charged each carry a maximum potential penalty of 20 years in prison and a fine of up to $250,000, or twice the gross loss or gain caused by the offense.

Simpson appeared before U.S. Magistrate Judge Leda Dunn Wettre in Newark federal court. He is charged by indictment with one count of conspiracy to commit wire fraud and two counts of wire fraud.

U.S. Attorney Craig Carpenito made the announcement.

U.S. Attorney Carpenito credited special agents of the U.S. Department of Housing and Urban Development, Office of the Inspector General, under the direction of Special Agent in Charge Christina Scaringi, with the investigation leading to the indictment.

The government is represented by Assistant U.S. Attorney Andrew Kogan of the U.S. Attorney’s Office Cybercrimes Unit in Newark.

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

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

 

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.

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.

 

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.