Kenneth Schwartz, 64, Huntington, New York, and Helene Stetch, 50, Lindenhurst, New York, have been charged by a Queens County grand jury with defrauding homeowners, financial institution and real estate buyers out of more than $1 million through a short sale mortgage fraud scheme that occurred over a nineteen-month period between October 2008 and May 2010.
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Nine defendants have been indicted in two separate mortgage fraud cases. Seven defendants were charged together in one case, and two in the second case, together alleging schemes to fraudulently obtain at least four residential mortgage loans totaling more than $1 million from lenders.
Theresa Sanders, a/k/a Theresa Hayes, 55, most recently of Westerville, Ohio, an attorney, Tracie Clark, 41, Wimauma, Florida, Michelle Powers, 51, DeRuyter, New York, an attorney, Steven Essig, 60, an appraiser, and Paul Sakowski, 44, both of Syracuse, New York, have been indicted for their roles in a mortgage fraud ring that operated for years and netted more than $1 million by preying upon first-time home buyers and institutional lenders.
The five defendants bilked consumers by advertising a rent-to-own opportunity in which first-time home buyers with low credit were offered the chance to own their own homes with no down payments and no closing costs. The accused then took out fraudulent loans against those properties, conned lenders into believing they were paying off underlying mortgages, and then pocketed the money. Continue Reading…
Two attorneys with a Forest Hills practice were convicted of mortgage fraud this week, according to the U.S. Attorney in Brooklyn. Matthew Burstein and Aaron Rabinowitz, both 40, were found guilty on ten felony counts of fraud for illegally obtaining …Two Queens Attorneys Convicted of Mortgage Fraud Equities.com2 NY Lawyers Convicted in $25M Mortgage-Fraud Case ABA JournalConvicted of Mortgage Fraud, Two Lawyers to Seek New Trial New York Law Journal (registration)all 5 news articles »
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Jacquelyn Torado, 42, Westbury, New York, Neal Sultzer, 61, Plainview, New York, and Kevin Hymes, 39, Armonk, New York, and former attorney Michael Schlussel, 50, Merrick, New York, pled guilty to conspiring to commit wire fraud and bank fraud in connection with a $66 million mortgage fraud scheme involving over 100 home mortgage loans for residential properties in the New York City area, Westchester County, Dutchess County, and Long Island.
According to the indictment previously filed in Manhattan federal court, as well as statements made in public proceedings:
First Class Equities (FCE), a/k/a Thunder Funding, a/k/a TAT Mutual Capital, was a mortgage brokerage firm with offices located in Oceanside and Old Westbury, New York. In August 2011, 14 individuals were charged in connection with their roles in a massive mortgage fraud scheme, including FCE‘s owner and president, loan officers, attorneys, and one disbarred lawyer. As part of the scheme, FCE arranged home sales between “straw buyers”””people who posed as home buyers, but who had no intention of living in, or paying for, the mortgaged properties””and homeowners who were often people in financial distress and willing to sell their homes.
Loan officers at FCE recruited straw buyers””many of whom were paid””and obtained mortgage loans on their behalf by submitting fraudulent applications to banks and lenders that made false representations about the straw buyers’ net worth, employment, income, and plans to live in the properties.
After approving the loans, the lenders sent the mortgage proceeds to attorneys who were involved in these transactions, including Torado, Sultzer, Hymes, and another attorney. Torado, Sultzer, Hymes, and Schlussel, acting on behalf of the fourth attorney involved in the scheme, would then appear at real estate closings and distribute the loan proceeds.
Schlussel held himself out as an attorney, but in fact, he had previously been disbarred and was not licensed to practice law. He and the other attorneys submitted false statements to the lenders about how they were distributing the loan proceeds and made illicit payments, typically totalling tens of thousands of dollars or more per transaction, from the loan proceeds to themselves and to other members of the conspiracy.
In addition, Torado and Schlussel caused false documents to be provided to lenders in order to obtain home equity lines of credit, or second mortgages, on properties purchased through straw buyers the same day, the proceeds of which Torado distributed among certain members of the conspiracy.
Torado pled guilty to one count of conspiracy to commit wire fraud and bank fraud and faces a maximum sentence of 30 years in prison. In connection with her plea, Torado agreed to forfeit $6,554,842. She will be sentenced by Judge Patterson on September 13, 2012 at 4:00 p.m.
Sultzer, pled guilty to one count of conspiracy to commit wire fraud and bank fraud and faces a maximum sentence of 30 years in prison. In connection with his plea, Sultzer agreed to forfeit $10,689,500. He will be sentenced by Judge Patterson on October 1, 2012 at 4:00 p.m.
Schlussel pled guilty to one count of conspiracy to commit wire fraud and bank fraud, and faces a maximum sentence of 30 years in prison. In connection with his plea, Schlussel agreed to forfeit $5,878,442. He will be sentenced by Judge Patterson on September 24, 2012 at 4:00 p.m.
Hymes pled guilty to one count of conspiracy to commit wire fraud and bank fraud and faces a maximum sentence of 30 years in prison. In connection with his plea, Hymes agreed to forfeit $7,606,500. He will be sentenced by Judge Patterson on September 27, 2012 at 4:00 p.m.
In addition to Torado, Sultzer, Schlussel, and Hymes, five other defendants charged in the scheme””Canino, Pandora Bacon, Michael Charles, James Vignola, and Henry Richards“”have also pled guilty and are awaiting sentencing.
Charges are still pending against the remaining five defendants””Ian Katz, Omar Guzman, Robert Thornton, Michael Raphan, and Ralph Delgiorno“”who are presumed innocent unless and until proven guilty. The trial for any remaining defendants is scheduled to begin on July 2, 2012.
Preet Bharara, the United States Attorney for the Southern District of New York, announced the guilty pleas.
Mr. Bharara praised the FBI for its outstanding work in the investigation.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Mr. Bharara serves as a co-chair of the Securities and Commodities Fraud Working Group. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch and, with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
This matter is being handled by the Office’s Complex Frauds Unit. Assistant U.S. Attorneys Nicole Friedlander, Andrew Goldstein, and Niketh Velamoor are in charge of the criminal case.
Manhattan U.S. Attorney Preet Bharara said, “In helping to perpetrate this massive mortgage fraud scheme, these individuals exploited their trusted positions as attorneys. And Michael Schlussel went a step further, representing himself as an attorney in good standing, when, in fact, he was not. With their guilty pleas, they now stand convicted for the roles they played in undermining the integrity of the mortgage industry and the legal profession.”
Business InsiderFederal prosecutors have brought a huge civil fraud case against one of the nation’s largest privately held mortgage brokerages, on the heels of a whistleblower suit with a Milwaukee connection. …Feds File Massive Fraud Case Against Allied Home Mortgage Business InsiderFeds Sue Mortgage Broker, Alleging Lending Fraud ClaimsJournal.comMortgage loans firm sued for $2.5bn over lending fraud Legalbrief (subscription)all 12 news articles »
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Source: Milwaukee Journal Sentinel (blog)
A New York title attorney who is awaiting sentencing for his role in a Long Island real estate developer’s $92 million mortgage origination fraud in Nassau County was disbarred last week. Federal Deposit Insurance Corp. is suing Ted …
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Source: ABA Journal
Federal prosecutors in New York on Thursday charged fourteen people in an alleged $58 million mortgage fraud, including five lawyers, one of whom previously had been disbarred. The scheme, which ran from 2004 to 2009 and revolved around a …EXCLUSIVE: 14 Charged in $60 Million Mortgage Fraud Scheme Fox NewsFeds: 14 Busted in $58M Long Island Mortgage Scam Long Island PressLI mortgage firm charged in $58M fraud Long Island Business News New York Law Journal - Patch.com - Thomson Reuters News & Insightall 29 news articles »
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Source: Wall Street Journal (blog)
Dustin Dente, 38, West Islip, New York and Brandon Lisi, 36, Glen Cove, New York, have been charged with a scheme to defraud various lending institutions by using straw buyers to obtain over $3.9 million in home mortgage loans that they then stole for their personal use. Both defendants were previously charged in a criminal complaint and arrested on October 15, 2009.
As alleged in the Indictment filed in Manhattan federal court and the previously filed criminal Complaint:
As previously reported on Mortgage Fraud Blog, from 2006 through March 2009, Dente and Lisi used straw buyers to obtain fraudulent home mortgage loans with respect to at least five properties. In order to induce lenders to approve loans that they otherwise would not have approved, Dente and Lisi prepared and submitted on behalf of straw buyers loan applications that contained false or misleading information. In many instances Dente and Lisi fraudulently improved the straw buyers’ credit worthiness by falsifying material personal and financial information about the straw buyers, including the straw buyers’ employment, income, assets, and existing debt. The defendants also lied about the straw buyers’ intention to live in the properties.
Dente and Lisi also acted as closing attorneys and/or the attorney for one of the parties on most of the fraudulent loan transactions. As a result, once the home mortgage loans were approved by the lenders based on the defendants’ fraudulent misrepresentations, the defendants controlled, or were otherwise able to direct, the disbursement of the home mortgage loan proceeds. For several of those fraudulently-obtained home mortgage loans, the defendants simply stole all or part of the loan proceeds for their own profit, and did not repay the prior mortgage loans on the properties. In other cases, the defendants obtained mortgage loans in amounts greater than the actual purchase prices for the properties and then kept or misappropriated for personal use a portion of the funds provided by the mortgage lenders.
The Indictment charges each defendant with one count of conspiracy to commit bank fraud and wire fraud, three counts of bank fraud, and one count of wire fraud. If convicted on these charges, Dente and Lisi each face a maximum sentence of 150 years’ imprisonment on all of the charges, and a maximum fine of $1,000,000 or twice the gross pecuniary loss or gain derived from the offense, on each count of conviction.
This case was part of the coordinated take down of “Operation Bad Deeds,” a joint federal, state, and local law enforcement operation targeting mortgage fraud crimes, announced on October 15, 2009, in which 41 defendants were charged in various mortgage fraud scams in New York, Pennsylvania, Ohio, and North Carolina.
The case is assigned to United States District Judge LAURA TAYLOR SWAIN. Both defendants are expected to be arraigned by Judge SWAIN on December 22, 2009, at 10 a.m.
Mr. BHARARA thanked the Federal Bureau of Investigation for their outstanding work.
This case is being prosecuted by the Office’s Complex Frauds Unit. Assistant United States Attorneys SEETHA RAMACHANDRAN and MICHAEL D. LOCKARD are in charge of the prosecution.
The charges contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
The State Bar of California has taken action against 5 more lawyers under investigation for loan modification misconduct, bringing to 14 the number of attorneys who have resigned or been placed on involuntary inactive enrollment since creation of the bar’s Loan Modification Task Force in April 2009.
Timothy Thurman [Bar #216048], 37, Altadena, California, resigned on November 2, 2009, with charges pending following his arrest by FBI agents in October 2009. Thurman‘s practice, Trinity Law Group in Los Angeles, which he started earlier this year, was doing lender litigation and loan modification. He was charged with creating and using a court order containing what he knew to be a forged signature of a federal judge. Thurman allegedly gave the document to his clients, who had sought Thurman‘s help to avoid eviction, telling them to give it to the sheriff, who became suspicious and contacted the judge. State Bar investigators worked with the FBI in the investigation.
Gary Davidson [Bar #32110], 75, Costa Mesa, California, and Eric Douglas Johnson [Bar #224065], 55, Culver City, California, resigned on November 4, 2009, after the Loan Modification Task Force filed charges.
Paul Lucas [Bar #163076], 48, Aliso Viego, California, of the Lucas Law Center, was ordered on November 4, 2009, involuntarily inactive for posing “a substantial threat of harm to (his) clients or the public” under Business and Professions Code 6007. State Bar Court Judge Lucy Armendariz said Lucas had inaccurately described his firm’s refund policy and its business relationship with Future Financial Services. She also said that Lucas had formed a partnership with a nonlawyer in violation of State Bar rules and aided in the unauthorized practice of law.
Armendariz noted that the Lucas Law Center, Future Financial and others had generated 45 State Bar complaints and 89 Better Business Bureau complaints. The Federal Trade Commission also issued a preliminary injunction against Lucas Law Center and Future Financial Services. Armendariz said Lucas, through his staff, agents and advertisements, misrepresented the scope of his service to clients, collected advance fees under false pretenses, recklessly advised clients to stop making mortgage payments, failed to perform services, failed to promptly refund earned fees and repeatedly failed to respond to client inquiries.
Sean Rutledge [Bar #255938], 34, Irvine, California, who started United Law Group in August 2008, was enrolled as of November 6, 2009, as an inactive member of the State Bar pending further order under Business & Professions Code 6007. Rutledge “promised to help troubled homeowners – many of whom were in arrears or on the brink of foreclosure – modify their home loans and maintain financial stability,” State Bar Court Judge Richard Honn wrote in his order of inactive enrollment. “Instead, he took their money and time and offered little or nothing in return. In fact, due to their loss of money and time, many of respondent’s clients ended up in a worse position than they were in when they originally turned to respondent for help… respondent has engaged in a pattern of client neglect involving failing to perform, failing to communicate, and/or failing to refund unearned fees in 14 separate client matters.”
The Loan Modification Task Force has received more than 1,250 complaints and is investigating almost 250 lawyers. Each task force investigator oversees about 135 cases, and almost 20,000 attorney files have been removed from the offices of attorneys whose loan modification practices have been shut down or abandoned. State Bar investigations are up 69 percent over 2008.
The State Bar has been working with local law enforcement as well as the state Attorney General’s Office and the FBI to address the problem of businesses and law firms preying on people about to lose their homes through foreclosure. Orange County Deputy District Attorney George McFetridge Jr. said coordination between the State Bar and his office in combating “these criminal enterprises that prey on desperate homeowners” has been invaluable. “I’m also thrilled that the State Bar has taken such an aggressive stance against attorneys who employ cappers, split fees with non-attorneys, engage in false advertising and commit fraud on the public,” he wrote in a letter to State Bar President Howard Miller.
Last month, a new law, SB94 by Sen. Ron Calderon, D-Montebello, took effect that prohibits attorneys and any others involved in mortgage relief from taking upfront fees for loan modification work. Weiner said the new law should reduce the number of lawyers committing loan modification misconduct.
“I am very pleased with the results being obtained by members of our Loan Modification Task Force,” said Interim Chief Trial Counsel Russell Weiner. “They have exceeded my expectations. Our office has been aggressively investigating and prosecuting attorneys alleged to have committed loan modification misconduct. Any attorney thinking that he or she can commit loan modification misconduct and get away with it for a significant period of time should think again.”