Fraudster Gets 12 Years for Posing as a Broker and Ripping Off Borrowers

Allison Tussey —  September 26, 2014 — Leave a comment

Kenneth J. Enrico, 47, Bohemia, New York, has been sentenced to 12 years in prison for posing as a mortgage broker to defraud over 300 borrowers nationwide out of $1.2 million in application fees for loans that he could not close.

According to the charges and other information presented in court: From 2009 until approximately October 2012, Enrico held himself out as a mortgage or real estate loan broker, doing business as Enrico Corporation, Bohemia, N.Y.  Enrico purported to offer a residential mortgage loan program that would finance as much as 105% of a home purchase at rates as low as 4.99%.

Enrico marketed his loan program to people who had sufficient income to make the monthly payment, regardless of their credit score.  He required prospective borrowers to pay him an up-front fee of $2,500 or more per loan, which supposedly was to cover the costs of processing and approving the loan application that borrowers submitted.   Enrico recruited brokers around the country, including in the Atlanta area, to market his fraudulent loan program nationwide.  Enrico incentivized the brokers by directing them to tack on extra application fees for themselves and promising them profits from the promised loan closings.

Enrico and his brokers received more than $1.2 million in application fees from more than 300 individuals across the country.  Although many of these individuals received a letter informing them that they had been approved for a loan, Enrico never closed a single loan.  In fact, Enrico lacked any source of funding for the loan program that he was marketing and appears to have done little or no work to obtain any such funding.  Enrico operated out his apartment, equipped with a telephone and a fax machine.  When the FBI executed a search warrant on his apartment in October 2012, special agents found boxes of loan applications stacked on the floor of Enrico’s closet.  Enrico had removed the checks from borrowers and brokers from such boxes and negotiated or cashed such checks.  Agents also found a total of $198,000 in cash in a safe, and other locations in Enrico’s apartment.

When buyers and brokers began questioning why loans never closed, Enrico gave numerous excuses and continued to promise that loans would close once various issues were resolved.  While prospective borrowers lost fees paid to Enrico and the brokers, many also lost additional funds (such as earnest monies and fees paid for appraisals or inspections) when their real estate purchase fell through after Enrico’s failure to close their loan.  Even after being indicted, Enrico continued to solicit loan application fees for loans that he could not close.

Enrico has been sentenced to 12 years in prison to be followed by three years of supervised release.  The Court left restitution open for a period not to exceed 90 days to facilitate the final identification of Enrico’s victims and their loss amounts.  Enrico was found guilty of 17 counts of conspiracy, mail fraud, and wire fraud by a jury on March 28, 2014.

United States Attorney Sally Quillian Yates announced the sentence.

 

This case is being investigated by the Federal Bureau of Investigation.

 

Assistant United States Attorneys Doug Gilfillan and Christopher Huber prosecuted the case.

“This defendant preyed on prospective home owners across the country that were pursuing the American dream of owning their own home,” said United States Attorney Sally Quillian Yates.

Britt Johnson, Special Agent in Charge, FBI Atlanta Field Office, stated: “The facts of this case clearly illustrate that mortgage fraud is not a victimless crime.  Because of the extensive harm done in these types of cases, the FBI will continue to aggressively identify, investigate, and present for prosecution those individuals involved.”

 

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Allison Tussey

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