Indictment in $18 Million Mortgage Fraud Scheme

admin —  April 2, 2009 — Leave a comment

Eliyahu Ezagui, 48, has been indicted on charges of bank fraud and conspiracy to commit bank and wire fraud for masterminding a scheme to defraud banks, mortgage lenders, and residents of the Crown Heights community in Brooklyn, New York of approximately $18 million in connection with the fraudulent mortgaging of condominium apartment units.

According to the Indictment, Ezagui enticed numerous victims to purchase condominiums in Crown Heights through “option agreements.” Option agreements entitled the victims to purchase condominiums at a reduced price prior to construction. Specifically, the victims paid between approximately $90,000 and $160,000 per unit and received contracts guaranteeing them the deeds for the units once construction was completed. After the properties were built, Ezagui provided the victims with access to the units, and the families moved in, believing they were the lawful owners of their new homes. However, Ezagui refused to transfer the deeds to the condominiums to the purchasers. Instead, Ezagui secretly transferred the deeds to “straw borrowers,” including himself and his family members. Thereafter, Ezagui submitted fraudulent mortgage applications and obtained mortgages on the units from numerous banks and mortgage lenders.

To conceal the fraud and to prevent the mortgages from being declared delinquent, Ezagui paid the monthly mortgage payments for several years. In approximately 2007, Ezagui stopped paying the mortgages. As a result, the individual victims who purchased the condominium apartments are now facing foreclosure on their residences, and the banks, mortgage lenders, and individual victims face losses totaling approximately $18 million.

If convicted, Ezagui faces a maximum sentence of 30 years of imprisonment.

The charges were announced by Benton J. Campbell, United States Attorney for the Eastern District of New York, and Ronald J. Verrochio, Inspector-in-Charge, New York Division, U.S. Postal Inspection Service. 

The defendant engaged in fraud to steal money from innocent homebuyers and financial institutions,” stated United States Attorney Campbell. “We will continue to aggressively investigate and prosecute mortgage fraud to protect homebuyers, lenders, and our housing market and to bring the perpetrators of such schemes to justice.” Mr. Campbell expressed his grateful appreciation to the Postal Inspection Service, the agency responsible for conducting the government’s investigation. In May 2008, Mr. Campbell announced the formation of a task force comprised of federal, state, and local law enforcement agents and investigators to address the burgeoning problem of mortgage fraud.

Postal Inspector-in-Charge Verrochio stated, “Besides losing thousands to the defendant, the victims in this case, who all bought condos from a con man, may now lose the roofs over their heads. We will continue to work with the U.S. Attorney’s office to ensure justice is served for those affected by the defendant’s actions.

The government’s case is being prosecuted by Assistant United States Attorney Melissa B. Marrus.

The charges announced are merely allegations, and the defendant is presumed innocent unless and until proven guilty.

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