14 Charged With Massive Mortgage Fraud Conspiracy

Allison Tussey —  November 14, 2014 — Leave a comment

An indictment has been unsealed charging 15 defendants, including charges of conspiracy to commit bank fraud and wire fraud in connection with mortgages and other loans secured by properties in Brooklyn, Manhattan and Monroe in Orange County, New York

The defendants include several related members of a family, the Rubins, as well as a real estate attorney and a real estate appraiser.  The Indictment sets forth a total of 21 counts charging various defendants with additional crimes, including making false statements to lenders, aggravated identity theft, and theft of public money.  Thirteen of the defendants were arrested today in a coordinated takedown.  They will be arraigned on the charges in the Indictment before United States Magistrate Judge Paul E. Davison in the White Plains federal courthouse.

According to allegations made in the Indictment:

IRVING RUBIN, the defendant, was a purported real estate developer.  IRVING RUBIN’s son, YEHUDA RUBIN, the defendant, was a purported mortgage broker and real estate developer.  IRVING RUBIN, as well as his brothers ABRAHAM RUBIN, JACOB RUBIN, and SAMUEL RUBIN, the defendants; his sons YEHUDA RUBIN and JOEL RUBIN, the defendants; his wife, DESIREE RUBIN, the defendant; and his relatives-in-law JOEL KOPPEL, BENZION KRAUS, RIFKA RUBIN, RACHEL RUBIN, and RIVKY RUBIN, the defendants, claimed to own properties in Brooklyn, New York, as well as in Manhattan and Orange County, New York.  MARTIN KOFMAN, the defendant, was a real estate lawyer licensed to practice in New York.  PINCHUS GLAUBER, the defendant, was a real estate appraiser licensed in New York.

From at least in or about 2004 through in or about 2014, IRVING RUBIN, a/k/a “Joseph Rubin,” YEHUDA RUBIN, a/k/a “Yidel Rubin,” PINCHUS GLAUBER, MARTIN KOFMAN, JOEL KOPPEL, a/k/a “Yoel Koppel,” a/k/a “Joel Kopple,” BENZION KRAUS, a/k/a “Benzion Krauz,” a/k/a “Benzion Krause,” ABRAHAM RUBIN, DESIREE RUBIN, a/k/a “Henchy Rubin,” JACOB RUBIN, a/k/a “Yaakov Rubin,” JOEL RUBIN, a/k/a “Yoel Rubin,” RACHEL RUBIN, a/k/a “Ruchy Rubin,” RIFKA RUBIN, a/k/a “Sura Rubin,” RIVKY RUBIN, a/k/a “Rivka Rubin,” and SAMUEL RUBIN, a/k/a “Shaye Rubin,” the defendants, and others known and unknown (hereinafter, the “Rubin Organization”), fraudulently obtained mortgage loans and other loans from banks and other lending institutions (the “lenders”).  The defendants obtained the loans by providing materially false information to the lenders about the borrowers’ assets and liabilities, including but not limited to false information about the borrower’s employment, income, bank accounts, and primary residence.  Through their scheme, the defendants fraudulently obtained more than $20 million in loan proceeds in connection with more than twenty fraudulent loans.  The majority of the loans went into default, and the majority of the loan proceeds were not repaid.

As part of the scheme to defraud, the defendants used the fraudulent loan proceeds to personally enrich themselves and their families.  Fraudulently obtained loan proceeds were used toward, among other things, (i) credit card debts for personal expenses of defendants, (ii) personal home mortgage payments of defendants, (iii) other real estate development projects including projects from which the defendants and others earned rental income, and (iv) debts arising from other fraudulently obtained loans, to conceal the fraudulent nature of these loans.

As part of the scheme to defraud, the defendants and others known and unknown also engaged in extensive efforts to perpetuate and conceal the fraudulent scheme.  These efforts included, but were not limited to:

  • Numerous members of the conspiracy acting as the borrowers for different loans, falsely claiming that the purpose of the loans was to purchase or refinance their primary residence, when, in fact the property was not their primary residence, and the loan proceeds were later distributed to other members of the conspiracy and to entities they controlled.
  • The common claim by multiple co-conspirators acting as borrowers of sole ownership or control of assets or bank accounts, to give the false appearance of creditworthiness, when in fact the assets and/or bank accounts were non-existent or were owned and controlled by other members of the conspiracy, and the borrower either had joint or no ownership of them.
  • Sham transfers of ownership of properties from one member of the conspiracy to another, or to other trusted individuals, thereby confounding attempts by lenders to recover on defaulted loans and facilitating further fraudulent borrowing against the properties.
  • Following default on a fraudulently obtained loan, coordinated efforts to deceive the lender into granting a satisfaction of the debt at a significant loss, such as by proposing short sales of properties that, unbeknownst to the lender, were not arm’s-length transactions.

In furtherance of the scheme to defraud, members of the conspiracy participated in fraudulently obtaining loans in several ways, including but not limited to the following:

  • YEHUDA RUBIN, the defendant, was an organizer of the fraudulent scheme.  YEHUDA RUBIN personally participated in at least ten of the particular fraudulent loans, in various roles, including as borrower, borrower’s power of attorney, mortgage broker, distributor of fraudulent loan proceeds, and arranger of short sales.
  • IRVING RUBIN, DESIREE RUBIN, ABRAHAM RUBIN, JACOB RUBIN, SAMUEL RUBIN, JOEL RUBIN, RIVKY RUBIN, RACHEL RUBIN, JOEL KOPPEL, RIFKA RUBIN, and BENZION KRAUSE, the defendants, were borrowers who fraudulently obtained loans from banks and other lenders.  Working in concert with co-conspirators, they obtained loans upon false representations and pretenses.  IRVING RUBIN, ABRAHAM RUBIN, JACOB RUBIN, SAMUEL RUBIN, and JOEL RUBIN, among others, also participated in the scheme by, among other things, (i) obtaining ownership of properties, (ii) assisting other borrowers in making false representations, (iii) receiving fraudulent loan proceeds, (iv) obtaining and distributing rental income on the properties, and (v) assisting in efforts to prevent or dissuade a lender from collecting on a defaulted loan.
  • MARTIN KOFMAN, the defendant, acted as real estate attorney on numerous transactions associated with the fraudulent loans, including closings.  KOFMAN, through his law firm’s trust account, distributed fraudulent loan proceeds between and among members of the conspiracy.  KOFMAN also provided false information to lenders, including “show checks,” to deceive a bank into believing that the borrower had made a down payment toward the purchase of a property, when in fact the borrower made no such payment and the checks were ultimately deposited back into the law firm’s trust account.
  • PINCHUS GLAUBER, the defendant, completed multiple appraisals of properties in connection with particular fraudulent loans.  GLAUBER included false information in the appraisals, including about the detail with which he had inspected the properties he appraised.  The estimated value of certain properties appraised by GLAUBER was false and inflated.

At the same time that the defendants were representing to banks that they had substantial income and assets, they were also representing to state and local agencies that they had little or no income and assets and were entitled to receive various forms of public assistance, including Medicaid, Food Stamps, and Home Energy Assistance Program (“HEAP”) benefits. For example:

  • YEHUDA RUBIN and RACHEL RUBIN, the defendants, received Medicaid and Food Stamps at various times during the conspiracy.  To receive benefits, they claimed, among other things, that their only income was $180 per month, and later $360 bi-weekly, from RACHEL RUBIN’s employment.  To receive loans totaling more than $1 million, on the other hand, YEHUDA RUBIN claimed that he was employed, earning more than $17,000 per month in employment and rental income, and RACHEL RUBIN claimed that she was employed, earning $14,000 per month.
  • JOEL RUBIN and RIVKY RUBIN, the defendants, received Medicaid and Food Stamps at various times during the conspiracy.  To receive benefits, they claimed, among other things, that they were homeless, and later that their only income was $130 per week and $180 per week.  To receive loans totaling more than $1 million, on the other hand, they claimed that RIVKY RUBIN was employed and had an income of $12,000 per month.
  • SAMUEL RUBIN, the defendant, received Medicaid and Food Stamps at various times during the conspiracy.  To receive benefits, SAMUEL RUBIN claimed, among other things, an income of $200 per week and $0 in financial resources.  To receive loans in excess of $7 million, however, SAMUEL RUBIN claimed an income of more than $350,000 per year and a net worth of more than $10 million.
  • IRVING RUBIN and DESIREE RUBIN, the defendants, received Medicaid at various times during the conspiracy.  To receive benefits, IRVING RUBIN and DESIREE RUBIN claimed, among other things, that their only income was $1,200 per week, from IRVING RUBIN’s employment at Tristate Management.  To receive a loan in excess of $500,000, on the other hand, IRVING RUBIN and DESIREE RUBIN claimed, among other things, that DESIREE RUBIN was employed at Tristate Management with a monthly income of $16,000.

In addition, seven are charged with theft of public money, in violation of Title 18, United States Code, Section 641.  In particular, the defendants are charged with obtaining Medicaid and/or Food Stamps by submitting false information in the applications for such benefits.

U.S. Attorney Preet Bharara, who made the announcement, praised the investigative work of the FBI and the Orange County Sheriff’s Office.

The prosecution is being handled by the Office’s White Plains Division.  Assistant U.S. Attorneys Benjamin Allee, Kathryn Martin, and Michael Maimin are in charge of the prosecution.

U.S. Attorney Preet Bharara stated: “The charges unsealed today describe a sweeping and cynical fraud.  As alleged, the scheme carried out by the Rubins and others ripped off banks, welfare programs, and taxpayers.  It ranged from 2004 to 2014, from Brooklyn to Harlem to Orange County, and the individuals involved alternately played the parts of prince or pauper, depending on which scam was being perpetrated.  Now their alleged double dealing will be stopped, and they will have to submit to the truth-seeking process of the criminal justice system.”

FBI Assistant Director George Venizelos stated: “In a clear case of double dipping, the defendants convinced lenders of their affluence while allegedly accepting aid from government programs established for the benefit of those less fortunate, profiting from the proceeds of millions of dollars in fraudulently obtained loans and significantly defrauding the government of public money. May today’s charges remind those who poke holes in the government safety net and exploit gaps in the mortgage and banking sectors that they will face the error of their ways.”

Orange County Sheriff Carl E. DuBois stated: “We would like to thank United States Attorney Preet Bharara and his staff for their efforts and assistance, and I would also like to thank the personnel from all of the agencies involved for a commitment to this long and complicated investigation.  It is important to note that this case originated from the Orange County Sheriff’s Office. Upon investigating what is usually a routine case, our investigator showed due diligence in her follow up, and with the latitude and encouragement by my office to investigate further using FBI resources, the result was a lengthy and comprehensive multi-jurisdictional, multi-million dollar mortgage fraud investigation.”

 

 

 

Be Sociable, Share!

Allison Tussey

Posts Google+

No Comments

Be the first to start the conversation.

Leave a Reply

Text formatting is available via select HTML.

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong> 

*