Suffolk County Grand Jury Indicts Six For Roles In Real Estate Scam
State Attorney General Spitzer today announced that as part of his office's continuing investigation into alleged mortgage fraud, a Suffolk County Grand Jury has returned an indictment charging six individuals with Grand Larceny in the First Degree and other crimes stemming from two separate real estate transactions involving a four-bedroom house located in the Town of East Setauket on Long Island's North Shore.
The indictment charges Frank DeGrasse, 45, of South Salem, and Andreas Perdikos, 41, a fugitive, with stealing $750,000 from Sun Trust Mortgage Bank and Freemont Investment and Loan by pretending to sell the property on two separate occasions to "straw buyers;" individuals who purported to be bona-fide purchasers but who, as part of a scheme, lent their name and credit history to the defendants in return for financial gain.
In addition, Denise Smith, 45, of Hempstead and Gerard Felix, 42, of Orange, New Jersey, are charged for their roles in recruiting and managing the straw-buyers, for which they were paid from the stolen loan proceeds. Another defendant, Lincoln Esteves, 33, of Newark, New Jersey is an out-of-state mortgage broker who allegedly helped funnel the second transaction through Sun Trust Mortgage Bank.
It is alleged that, after selling the house in November 2004 for $870,000, and stealing over $750,000 in mortgage loan proceeds from Freemont Investment and Loan, Perdikos orchestrated a second deal with DeGrasses' assistance, just 11 months later, for $1.3 million. This transaction was advanced by falsely inflating the value of the home by over $500,000 through a forged appraisal done by Perdikos. This fraudulent appraisal, along with numerous other falsified documents, and bank statements, was used to secure the new mortgage.
Emmanuel Constant, 49, of Brooklyn, allegedly played a critical role in recruiting the second straw buyer and in forging the bank statement that was used to fool the bank into giving the loan. For his role in the conspiracy, Constant was allegedly paid $45,000.
It is further alleged that DeGrasse appeared as the legal counsel to the bank at both of the closings, breached his fiduciary duty, and was a co-conspirator who had full-knowledge of the scheme.
During the first sale, DeGrasse misappropriated the bank's loan money, which had been transmitted to his attorney escrow account for the purposes of paying Perdikos. Degrasse used over $100,000 of this money to misrepresent the ability of the "straw buyers" to pay the balance at the closing. In reality, the straw buyer paid nothing, and the funds were re-deposited the next day into DeGrasse's account and then used to pay the co-conspirators.
Perdikos, the properties' true owner, remained in residence and pocketed hundreds of thousands of dollars from the bogus transaction. DeGrasse falsified documents submitted to both banks that included false statements, hid the identities of the true owner and the accomplices and misrepresented how the bank's funds were paid at the time of closing.
The indictment, and bail applications were unsealed on July 6, 2006 by the Honorable Michael Mullin in Supreme Court, Suffolk County. Justice Mullin scheduled arraignments for July 6 and 7.
The charges contained in the indictments are merely accusations, and the defendants are presumed innocent until and unless proven guilty. They are the result of a long-term investigation by the Attorney General's Organized Crime Task Force into mortgage fraud and real estate-related criminal activity in the metropolitan area. The investigation is ongoing.
The prosecution of this case was handled by Assistant Deputy Attorney General Peter Zanolin under the direction of Deputy Attorney General Christopher Prather of the Organized Crime Task Force. They were assisted by Senior Investigator Gerald Quinn, under the supervision of Supervising Investigator Arthur Schwartz.