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Settlement in Claims for Fraud with Residential Mortgage-Backed Securities

Stephanie Abbott — November 14, 2019 — 1 Comment

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)

In Mortgage Fraud New York, residential mortgage -back securities

A.G. Wants to Abandon Proposed Rules That Promote Discrimination In Mortgage Lending

Stephanie Abbott — October 16, 2019 — 1 Comment

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.

In Mortgage Fraud Consumer Financial Protection Bureau, Home Mortgage Disclosure Act, New York

Man Sentenced for Transferring Deed to Himself After Forging Notary’s Signature

Stephanie Abbott — September 11, 2019 — Leave a comment

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. https://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.

In Mortgage Fraud deed fraud, Forgery, New York

Five Defendants Indicted in Short Sale Fraud Scheme

Stephanie Abbott — September 10, 2019 — Leave a comment

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.

In Mortgage Fraud false liens, New York, Short Sale Fraud

New York Loan Modification Scam Indicted

Rachel Dollar — October 7, 2015 — Leave a comment

David Gotterup, also known as “David Gott,”, 35, Oceanside, New York, and Jason Green, 35, Oceanside, New York, were charged in an eleven-count indictmenet with conspiracy to commit mail fraud, wire fraud, and bank fraud in connection with a scheme to defraud homeowners who were attempting to modify their mortgage loans, and related mail fraud counts. The indictment also charged Gotterup with conspiracy to commit wire and bank fraud in connection with a scheme to improperly obtain mortgage loans, and related bank fraud counts, disaster loan fraud, and aggravated identity theft. Continue Reading…

In Mortgage Fraud advance fee scam, False Documents, fraudulent loan applications, Loan Modification, New York

HUD Repurchase Avoidance Scam Alleged by US

Rachel Dollar — September 29, 2015 — 1 Comment

The United States filed a civil suit against the Rainy Day Foundation, Inc., a purported charitable “counseling fund,” together with its associated business entities and principals. The case was filed federal court in Central Islip, New York and has been assigned to United States District Judge Joseph F. Bianco.

The complaint alleges that in at least 865 instances, the Rainy Day Foundation, together with five Eastern District of New York-based mortgage lenders and their principals, defrauded the United States and various banks insured by the Federal Deposit Insurance Corporation (“FDIC”), resulting in millions of dollars of mortgage losses, and requiring the United States to pay over $5,605,237 in false claims. Continue Reading…

In Mortgage Fraud HUD, New York

Two Plead Guilty in Mortgage Modification Scheme

Rachel Dollar — September 16, 2015 — 3 Comments

Ped Abghari, a/k/a “Ted Allen,” 38, Irvine, California, and Justin Romano, 41, of Blue Point, New York, pled guilty for their roles in orchestrating a massive mortgage modification scheme that collectively defrauded over 8,000 homeowners out of over $18.5 million. Abghari and Romano each pled guilty to wire fraud and conspiracy to commit wire fraud, and Abghari also pled guilty to misprision of a felony. Romano pled on September 14, 2015, and Abghari pled on September 15, 2015, before U.S. District Judge. John F. Keenan. Continue Reading…

In Mortgage Fraud attorney, California, Loan Modification, New York

Conviction in Massive Mortgage File Theft

Rachel Dollar — September 2, 2015 — Leave a comment

Anika N. Greene, 42, Bronx, New York, was convicted by a federal jury on charges of conspiracy to commit bank and wire fraud, bank fraud, wire fraud, access device fraud and three counts of aggravated identity theft.

Green was charged in a superseding indicted on July 15, 2014. According to court records and evidence presented at trial, Greene and three other individuals, Jeffrey Washington, Alice Howard, and Catya J. Craig, burglarized Wells Fargo mortgage offices throughout New York, New Jersey, Connecticut and Maryland in 2012 and 2013. The defendants stole over 1,800 mortgage files that were then used in a variety of bank customer impersonation and retail credit fraud schemes, targeting various banks and retailers. Washington recruited individuals to go into banks, impersonate customers and remove funds via setting up business accounts and transferring funds from the accounts of bank customers. Washington and other defendants, including Greene, traveled from New York to the Eastern District of Virginia on multiple occasions throughout 2012 and 2013. Continue Reading…

In Mortgage Fraud Connecticut, Maryland, New Jersey, New York

New York Businessman Pleads Guilty in Multi-Family Fraud

Rachel Dollar — August 28, 2015 — Leave a comment

Selim Zherka, 47, businessman, Somers, New York, pled guilty to conspiring to make false statements to a bank in order to receive millions of dollars in loans and to file materially false tax returns with the IRS. As part of his plea agreement, Zherka agreed to forfeit $5.23 million.

According to the Superseding Information filed in White Plains federal court and other court documents filed in the case: From December 2005 through the present, Zherka conspired with others to obtain $63.5 million in loans from Sovereign Bank (now Santander), for the purchase and/or refinancing of apartment house complexes in Tennessee by lying about the purchase price of the real estate he was acquiring and the amount of the down payment he was making toward the purchase in question. Continue Reading…

In Mortgage Fraud Down Payment Fraud, inflated sales price, multi-family, New York

Judge Denies Habeas, Upholding Fraud Conviction

A former leader of a Haitian paramilitary force failed to persuade a judge that his mortgage fraud conviction in the United States was unsound.

Eastern District Judge Jack Weinstein denied Emmanuel “Toto” Constant’s habeas corpus petition on Friday, saying the lead-up to his conviction—which involved a state judge’s sua sponte decision to vacate Constant’s plea deal in light of serious allegations against him for his acts in Haiti—did not run afoul of due process requirements.

Posted by Rachel Dollar onAugust 19, 2015 In Mortgage Fraud on the web appeal, New York

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