Former Twin Lakes Man Sentenced to Prison for Role in Mortgage Fraud Scheme
|U.S. Attorney’s Office January 31, 2013|
The Office of the United States Attorney announced that on January 29, 2013, Federal District Judge Lynn Adelman sentenced Paul Zaleski, age 64, formerly of Twin Lakes, Wisconsin, now living in Ojai, California, to 14 months in federal prison for his part in a mortgage fraud scheme that spanned 2004 to 2006. Zaleski, who pled guilty to one count of wire fraud and one count of money laundering, faced a total of 30 years in prison for these offenses.
According to the indictment, Zaleski, acting as a mortgage broker, orchestrated a scheme which involved straw buyers, fraudulent loan applications, and inflated appraisals. At the result, he was able to arrange in excess of $14 million in loans for the purchase of approximately 51 properties located in southeastern Wisconsin and northern Illinois. More than $2 million of the loan proceeds wired by the various lenders were funneled to shell companies that Zalesk established.
In connection with the scheme, Zaleski represented himself as a person involved in the purchase and improvement of real estate for profit and the coordinator of a group of investors engaged in that activity. All but a few of the properties ultimately went into foreclosure resulting in a loss of more than $5 million.
The money laundering counts alleged that ill-gotten loan proceeds were used, in part, for the purchase of additional properties and for personal expenses, including Zaleski’s purchase of a new Chevrolet Corvette.
Adelman previously sentenced Zaleski’s co-conspirators for their roles in the fraud scheme. Appraiser John Hochrek, 51, of Ingleside, Illinois, was sentenced to one year in prison for wire fraud. Remodeling contractor Michael Pembroke, 48, of Twin Lakes, Wisconsin, was sentenced to one year in prison for wire fraud and money laundering. Investor Patricia Kay, 60, of Kenosha, Wisconsin, was sentenced to three years’ probation for misprision of a felony. Loan processor, Robert Farrell, 33, of Mundelein, Illinois, was sentenced to three years’ probation for conspiracy. Restitution has yet to be determined.
According to First Assistant United States Attorney Gregory Haanstad, “This prosecution reflects the Department of Justice’s commitment to protecting homeowners, lenders, and the economy from the serious damage that flows from mortgage fraud. As was the case in this prosecution, our office will continue to work collaboratively with the FBI, the IRS, and our other law enforcement partners to hold accountable those who engage in these frauds and who, by doing so, undermine the integrity of our housing and credit markets.”
“Mortgage fraud has had a devastating impact on our society,” said Teresa L. Carlson, Special Agent in Charge of the FBI Milwaukee Division. “However, through the great collaboration of our law enforcement partnerships, we will continue to dedicate resources to combat the threat of mortgage fraud here in Wisconsin and across the nation.”
“Mr. Zaleski held a position of trust not only in First Security Financial, but also in the eyes of the public and the Kenosha community as a whole, and unfortunately chose to violate that trust and abuse his position,” said Kelly Jackson, Special Agent in Charge of the IRS-Criminal Investigation office who investigated Zaleski. Jackson added that federal authorities will continue their efforts to diligently investigate and prosecute crimes which financially victimize others.
This case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation.