Eight Indicted In Massive Mortgage Fraud Ring
New York State Attorney General Spitzer and New York State Banking Superintendent Diana L. Taylor today announced the indictments of eight individuals charged with Enterprise Corruption and other felonies in connection with a multi-million dollar residential mortgage fraud scheme. Attorney General Spitzer also announced the filing of a civil forfeiture action seeking the recovery of more than $8 million from the defendants.
The 83-count indictment alleges the criminal enterprise, named in the indictment as the "Sandella Group," operated since at least 2001, principally in Brooklyn, Queens and Suffolk County. Defendant Louis Sandella is named as the Groups leader, assisted by his brother, defendant Michael Sandella, defendant Danielle Moss Fontanez, and five others, including two real estate attorneys defendants Gary S. Shaw and Ida DAngelo.
As outlined in the indictment unsealed today in Kings County Supreme Court, members of the Sandella enterprise stole millions of dollars from banks and other financial institutions by submitting false and forged documents to secure mortgage loans. The Sandella Group paid people to pose as legitimate real estate buyers. False information about these straw buyers employment, income and financial assets were provided to the banks to obtain the loans. The banks were also provided false real estate appraisal reports which often misrepresented the physical conditions of the properties, the market value of comparable properties and the identities of the individuals who prepared the reports. Through these reports prepared by a member of the Sandella Enterprise the value of individual properties used in the fraudulent mortgage transactions were inflated by $100,000 or more.
The Attorney Generals investigation began in 2002, based upon intelligence developed by his Organized Crime Task Force and his Civil Rights Bureau, combined with information from other law enforcement agencies. Additional investigative resources were contributed by the State Banking Department, the State Insurance Department, the Federal Bureau of Investigation, the US Department of Labor and the Waterfront Police.
"For the average American, buying a home is their most important investment. The scams carried out by these defendants not only harmed targeted individuals and lending institutions, but had the potential to undermine the housing market in the neighborhoods where they practiced their scheme. Protecting New Yorks real estate market from this kind of fraud must be a priority for all of law enforcement." Spitzer said.
New York State Banking Superintendent Diana L. Taylor said: "I am proud of the role that the Banking Departments Criminal Investigations Bureau played in this investigation. What this criminal network did was to rob hard-working New Yorkers and banks of equity and confidence in what should be an honest, law-abiding, professional industry. We will continue to work closely with law enforcement to protect the interests of New Yorkers, the health of our communities and the safety and soundness of our financial institutions."
The ultimate financial losers were the financial institutions, which provided the mortgage loans based on fraudulent applications.
A transaction set out in the indictment as an example of the Sandella enterprises scheme concerns the January, 2004 sale of a house in Flatbush, Brooklyn. Although the true purchase price of the property was $310,000, the Sandella Group falsely told the bank that the purchase price was $450,000, and applied to the bank for a loan in that amount. The criminal enterprise gave the bank false information about the financial condition of a "straw buyer" that it recruited as a front man in the transaction, and submitted a forged appraisal report. The group then pocketed the bulk of the inflated amount, and allowed the loan to go into default.
The following individuals are being arraigned today before Judge John J. Walsh:
Louis Sandella, 43, of Commack; Michael Sandella, 41, of Hauppauge; Danielle Moss, 36, of, Commack; Kim Moss Fontanez, 33, of Lindenhurst; Geraldine Moss, 60, of West Babylon; Gary Shaw, 68, of Northport; and Ida DAngelo, 38, of Dix Hills, NY. One defendant, Andreas Perdikos, 41, of New Jersey, remains at large.
The charges included in the indictment are: Criminal Enterprise, a class B Felony; Grand Larceny in the First and Second Degrees, a class B and C felony, respectively; Scheme to Defraud in the First Degree, a class E felony; and Falsifying Business Records in the First Degree, a Class E felony.
If convicted of the top count, the defendants face prison sentences of up to 25 years. The charges in the indictment are merely accusations and the defendants are presumed innocent until and unless proven guilty.
Spitzer and Taylor thanked Assistant Director in Charge Mark Mershon of the FBI, Brooklyn District Attorney Joe Hynes, Suffolk District Attorney Thomas Spota, Superintendent Howard Mills of the New York State Department of Insurance, Inspector General Gorden Heddell of the United States Department of Labor, Commissioner Andrew Eristoff of the New York State Department of Taxation and Finance, and Executive Director Thomas DeMaria of the New York-New Jersey Waterfront Commission for their assistance on this case.
The case is being prosecuted by Assistant Deputy Attorneys General Sean Courtney, Peter Zanolin and Robert Biancavilla of the Organized Crime Task Force, under the direction of J. Christopher Prather, the head of the Task Force. The civil forfeiture is being handled by Assistant Attorney General Lynn Goodman, head of the Criminal Divisions Forfeiture Unit. Former AAG Leah Griggs-Pauley, of the Civil Rights Bureau, assisted in the investigation.