Attorney General Cuomo Announces Takedown Of Mortgage Fraud Ring That Obtained Millions In Loans For Phantom Home Buyers

NEW YORK, NY (October 8, 2009) - Attorney General Andrew M. Cuomo and Southern District of New York United States Attorney Preet Bharara today announced the takedown of a mortgage fraud ring that illegally obtained $9 million in loans for phantom home buyers. Twelve defendants, including lawyers, loan officers, and providers of false identification, were arrested today and charged with conspiracy to commit bank fraud and wire fraud.

The Attorney General’s office led a multi-agency investigation that resulted in the charges unsealed today. As alleged in the indictment: Between 2005 and 2007, the defendants engaged in an illegal scheme to trick various mortgage lending institutions into giving loans for the purchase of homes in New York City and Long Island. In many instances, the defendants used fake identity information - like driver’s licenses and bank statements - and presented imposters at home closings who claimed to be those identities. Through the scheme, the defendants obtained dozens of home mortgage loans with a face value of approximately $9 million. Some loans were in the names of individuals who did not exist and others were in the names of individuals whose identification information had been misused. Most of these loans are now in default.

“This is exactly the type of criminal activity that was caused by - and contributed to - the terrible mortgage crisis facing our nation,” said Attorney General Cuomo. “These defendants were allegedly able to obtain millions of dollars in home loans for phantom buyers precisely because obtaining these loans was far too easy at the time. As we work to reform our nation’s mortgage regulation, law enforcement must continue to collaborate to ensure that those who exploited the system for their personal financial gain are brought to justice.”

“The U.S. economy is still reeling from the damage done by mortgage fraud schemes like the one unraveled today. These charges expose the corrupt conduct of industry insiders who allegedly manipulated the mortgage markets to fraudulently obtain millions in loans. What is especially disturbing is that two of the alleged fraudsters were attorneys who used their law degrees to cheat the system and line their pockets. We will continue to prosecute corrupt custodians of the mortgage markets to the full extent of the law because our financial system depends on it,” said Preet Bharara, the United States Attorney for the Southern District of New York.

The twelve defendants consist of settlement attorneys, attorneys involved in mortgage loan closings, loan officers, loan processors, as well as individuals who produced false identification documents, secured the fake buyers, and those who pretended to be the fraudulent identities at the closings. All defendants are charged with Conspiracy to Commit Bank Fraud and Wire Fraud, which carries a maximum sentence of 30 years’ imprisonment. The defendants are:

  • Jeffrey LaRochelle, 29, of Bay Shore, New York, processed loans through Reliable Capital, a mortgage brokerage firm. LaRochelle identified target properties, supervised and coordinated the creation of false information for the fraudulent buyers, and coordinated the activities of other co-conspirators.
  • Eric Finger, 44, of Mineola, New York, a New York State attorney, acted as the settlement agent representing the lender in connection with closings on many of the target properties. Finger also made payments from the mortgage loan proceeds to certain other members of the conspiracy and hid the true disbursements of the loan proceeds from lenders by preparing false mortgage documents.
  • Denise Parks, 43, of Olive Branch, Mississippi, processed loans through Atlas Home Equities. Parks also prepared fraudulent mortgage loan applications and falsely verified the employment and residential information for various fraudulent identities.
  • Foriduzzman Sarder, 40, of Jackson Heights, New York, coordinated the use of various fraudulent buyers to buy homes with residential mortgage loans. Sarder also provided his contact information to mortgage brokers and mortgage lenders to verify loan application information of fraudulent identities.
  • Sakat Hossain, 43, of Jackson Heights, New York, posed as several different fraudulent buyers of various targeted properties. In exchange for serving as the fraudulent identities, Hossain received payments from the loan proceeds.
  • Mikael Huq, 34, of Astoria, New York, among other things, created false identification documents in the names of the fraudulent buyers for use at closings for target properties.
  • Reginald Johnson, 36, of St. Albans, New York, controlled the Hempstead office of Reliable Capital. Johnson, among other things, prepared fraudulent mortgage loan applications and falsely verified the employment and/or residential information submitted in connection with the applications.
  • Frederick Warren, 35, of Miller Place, New York, processed loans through Reliance Capital and other brokers. Warren participated in identifying target properties and prepared and processed fraudulent mortgage loan applications.
  • Dorian Brown, 36, of Mount Sinai, New York, was a loan officer at Lend America, a mortgage lender and broker located in Long Island, New York. Brown identified target properties, processed fraudulent mortgage loan applications, and coordinated the use of the fraudulent buyers.
  • Fritz Bonaventure, 28, of Lithonia, Georgia, was an independent contract employee at Lend America. Bonaventure identified target properties, coordinated the used of fraudulent identities and fraudulent identification documents, and provided information about the fraudulent buyers to mortgage brokers, loan officers, and loan processors.
  • Joell Barnett, 36, of Brooklyn, New York, a New York State attorney, acted as either the buyer’s attorney or the seller’s attorney in connection with the sales of some of the target properties. In these roles, among other things, Barnett received payments from the loan proceeds that were not disclosed to lenders and disbursed those funds to other members of the conspiracy.
  • Brandon Lisi, 36, of Glen Cove, New York, a New York Attorney, prepared sales contracts for the purchase of target properties and procured fraudulent buyers to act as purchasers for the target properties.

In addition to criminal penalties, prosecutors are also seeking forfeiture of the illegal funds allegedly obtained by the defendants. This investigation is ongoing.

Assistant Director-in-Charge of the New York Field Division of the Federal Bureau of Investigation Joseph M. Demarest, Jr., said, “The scheme alleged in the indictment is a model of vertical integration. There were corrupt participants at each step of the mortgage process, from buyers to lenders to lawyers. The one obvious flaw in their scheme was that they got caught.”

Superintendent of Banks for New York State Richard H. Neiman said, “This multifaceted mortgage fraud scheme represents one of the most egregious types of criminal behavior since it involves attorneys and brokers who, instead of being the gatekeepers that protect our financial system, abused their positions and joined a conspiracy to steal millions of dollars. I am proud of the outstanding work the Banking Department’s Criminal Investigation Bureau has performed since the inception of this investigation and thank the SDNY, FBI and NYSAG’s office and our other law enforcement partners that worked with us on this investigation.”

Special Agent in Charge of the New York Field Office of the United States Secret Service Brian G. Parr said, “Mortgage fraud is a continuing threat to our nation’s financial system, compromising the identities of ordinary citizens. The Secret Service is committed to investigating these types of crimes, utilizing strong interagency partnerships, in order to bring these perpetrators to justice.”

Inspector-in-Charge of the New York Division of the United States Postal Inspection Service Ronald J. Verrochio said, “The Postal Inspectors will aggressively pursue these cases to ensure public confidence in the mortgage financial markets.”

This case is the culmination of a long-term investigation led by the Attorney General’s office, including court-authorized eavesdropping conducted by the Attorney General’s office, along with extensive interviews and surveillance. Valuable assistance was provided by the New York State Banking Department, the Federal Bureau of Investigation, the New York State Department of Motor Vehicles, the United States Postal Inspection Service, the Social Security Administration, the Department of Homeland Security’s U.S. Immigration and Customs Enforcement, and the United States Secret Service. This case is being prosecuted by the Attorney General’s office and the United States Attorney’s Office for the Southern District of New York.

The charges against the defendants are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

 

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