Appraiser Pleads Guilty to $1M Appraisal Fraud Scheme

Allison Tussey —  May 14, 2015 — Leave a comment

Steven Essig, Syracuse, New York, a licensed appraiser and the owner of an appraisal company in Syracuse, pleaded guilty to a felony charge stemming from making false entries in an appraisal report. The falsified report was used to obtain a mortgage as part of a million dollar mortgage fraud scheme.

Essig entered a guilty plea before the Honorable Anthony F. Aloi, Onondaga County Court Judge, to the charge of Falsifying Business Records in the First Degree, a Class E felony. As part of his plea, Essig is expected to be sentenced to five years probation and must surrender his appraisal license, preventing him from conducting any further appraisals in New York State.

Essig was charged as part of a Syracuse-based mortgage fraud ring that operated for several years and netted more than $1 million by preying upon first-time home buyers and institutional lenders. The ring purchased dozens of dilapidated homes in and around the City of Syracuse from the United States Department of Housing and Urban Development, and then had them appraised, sometimes for more than what they had just paid for them.

After paying for the properties, the ring took mortgages out on each of the homes, usually in the names of family members. The homes were advertised as rent-to-own opportunities to entice first-time home buyers with low credit by offering the chance to own their own homes with no down payments and no closing costs. Members of the ring then applied for what they told lenders were refinance loans in the names of these first-time home buyers, despite the fact that the first-time home buyers had never before owned the homes they were refinancing. Lenders, believing they were paying off underlying mortgages, wired closing funds to accounts controlled by the ring, who then pocketed the money.

Essig is the owner and operator of Essig Appraisals, an appraisal company that specialized in residential appraisals. According to statements made in Court during Essig’s plea, Essig admitted that he made a false entry in an appraisal that he completed for 225 Hazelhurst Avenue, Syracuse, on July 7, 2008 by stating that the property had been transferred on November 19, 2007 for $84,000. In truth, the most recent transfer of that property had occurred on July 8, 2005 for $37,800.

Essig’s appraisal of 225 Hazelhurst Avenue, which he valued at $85,000, was subsequently used by the ring to obtain a refinance mortgage in the amount of $61,257 from AmTrust Bank. Essig admitted that he made the false entry in the appraisal report with intent to defraud and intent to aid and conceal the commission of another crime.

Essig’s sentencing before the Honorable Anthony F. Aloi has been scheduled for July 8, 2015.

Attorney General Eric T. Schneiderman announced the conviction.

The Attorney General thanks the following partners for their valuable assistance in this case: the New York State Department of Financial Services, the New York State Police, the U.S. Department of Housing and Urban Development Office of the Inspector General (HUD-OIG), the U.S. Internal Revenue Service, Criminal Investigations Divisionand the Columbus, Ohio Division of Police.

The case was investigated by New York State Police Investigator Kevin Buttenschon, HUD-OIG Assistant Special Agent-in-Charge Heather Yannello, and Office of the Attorney General Investigators Andrea Buttenschon, Scott Petucci, David Buske, and Joel Cordone, under the supervision of Supervising Investigator Richard Doyle and Deputy Chief Investigator Antoine Karam. The Investigations Division is led by Chief Dominick Zarrella.

The case is being handled by Assistant Attorney General Andrew J. Tarkowski of the Criminal Enforcement and Financial Crimes Bureau. The Bureau is led by Bureau Chief Gary Fishman and Deputy Chiefs Meryl Lutsky and Stephanie Swenton. The Division of Criminal Justice is led by Executive Deputy Attorney General Kelly Donovan.

“It is simply appalling that any individual would seek to take advantage of new homeowners in this manner,” said Attorney General Eric Schneiderman. “Today’s conviction sends a message that my office is committed to protecting New York families from predatory fraudsters.”

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Allison Tussey

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