Manhattan U.S. Attorney Charges 41 Defendants in Coordinated Mortgage Fraud Takedown Across New York State
Defendants Charged with Fraudulently Obtaining More Than $64 Million in Residential Mortgages on More Than 100 Properties; Lawyers, Mortgage Brokers, and Loan Officers Among Those Arrested in "Operation Bad Deeds"
|U.S. Attorney’s Office October 15, 2009|
PREET BHARARA, the United States Attorney for the Southern District of New York, JOSEPH M. DEMAREST, JR., the Assistant Director-in-Charge of the New York Field Division of the Federal Bureau of Investigation ("FBI"), RICHARD H. NEIMAN, the Superintendent of Banks for New York State, RENE FEBLES, the Special Agent-in-Charge of the New York Field Office of the Department of Housing and Urban Development, Office of Inspector General ("HUD-OIG"), BRIAN G. PARR, the Special Agent-in-Charge of the New York Field Office of the United States Secret Service ("USSS"), RONALD J. VERROCHIO, the Inspector-in-Charge of the New York Division of the United States Postal Inspection Service ("USPIS"), and JON T. RYMER, the Inspector General for the Federal Deposit Insurance Corporation, Office of Inspector General ("FDIC-OIG"), announced today the unsealing of charges against 41 defendants, in eight separate cases, for allegedly engaging in various mortgage fraud scams that collectively defrauded lenders out of more than $64 million in home mortgage loans on more than 100 properties across New York State. Among those charged are six lawyers, seven loan officers, three mortgage brokers, an accountant, and a residential property appraiser.
As part of the coordinated takedown of "Operation Bad Deeds," a joint federal, state, and local law enforcement operation targeting mortgage fraud crimes, 31 defendants were arrested or surrendered to authorities today in New York, Pennsylvania, Ohio, and North Carolina. One additional defendant is expected to surrender to authorities later today. The defendants taken into custody today are expected to be presented in federal court later this afternoon.
Four of the defendants were previously charged and will appear in Manhattan federal court at a later date, and five defendants remain at large.
The mortgage fraud scams alleged in the cases announced today included, among other things, property flips, equity stripping, and appraisal and loan fraud. In one case, defendants operated a foreclosure rescue scheme, targeting individuals who were on the verge of losing their homes by tricking them into giving up the equity in the properties with false promises that their homes would be saved.
PREET BHARARA, the United States Attorney for the Southern District of New York, said: "As the U.S. economy struggles, we will continue to have a zero tolerance policy for those who defraud financial institutions and prey on homeowners on the brink of foreclosure. The type of criminal conduct charged today constricts the credit markets and makes it harder for honest people to realize the American dream of home ownership. It is especially alarming when lawyers, loan officers, and mortgage brokers treat their professional licenses as license to loot banks and profit from other people's pain. Particularly in this down economy, the message to those professionals and their alleged criminal cohorts is simple: we will find you, arrest you, and send you to jail."
JOSEPH M. DEMAREST, JR., the Assistant Director-in-Charge of the New York Field Division of the FBI, said: "Combating mortgage fraud is a priority because mortgage lending and the housing market have such an impact on the nation's economy. The defendants charged today include mortgage brokers, lenders, lawyers and buyers. The FBI is aggressively pursuing criminal conduct at every stage of the mortgage process."
RICHARD H. NEIMAN, the Superintendent of Banks for New York State, said: "A key factor leading to the mortgage crisis was the failure of the gatekeepers—including mortgage brokers and attorneys. Unfortunately, instead of protecting our financial system, in some cases they abused their positions and joined criminal schemes to steal millions of dollars. The Banking Department's Criminal Investigation Bureau will continue to work with our law enforcement partners to pursue individuals that, through fraudulent activities, attempt to undermine the financial system."
RENE FEBLES, the Special Agent-in-Charge of the New York Field Office of the HUD-OIG, said: "One of our government's most important responsibilities is administering and enforcing our laws that bring a degree of order and protect our citizens from fraudsters and wrongdoers. This joint prosecutorial effort is our continuing demonstration of our commitment to ensuring that mortgage programs remain whole for borrowers throughout the nation."
BRIAN G. PARR, the Special Agent-in-Charge of the New York Field Office of the USSS, said: "The effects of mortgage fraud continue to adversely impact our nation's financial systems. The results of this investigation are a testament to the collaborative efforts between the Secret Service and our law enforcement partners. We will continue to aggressively pursue those that victimize our citizens and our banks."
RONALD J. VERROCHIO, the Inspector-in-Charge of the New York Division of the USPIS, said: "The arrests today are emblematic to the extent Postal Inspectors will work closely with State and Federal agencies to combat fraud which victimizes individuals, the economy, and our neighborhoods."
JON T. RYMER, the Inspector General for the FDIC said: "The FDIC-OIG is committed to its partnerships with others in the law enforcement community as we address mortgage fraud cases throughout the country. The American people need to be assured that their government is working to ensure integrity in the financial services and housing industries and that those involved in criminal activities that undermine that integrity will be held accountable."
The cases announced today are described in greater detail below. The charges against each defendant and the corresponding maximum potential penalties are contained in charts attached to this press release.
United States v. Lavette Bills, et al.
Ten defendants are charged in an 11-count Superseding Indictment with perpetrating a mortgage fraud scheme involving loans totaling over $5.6 million for at least 11 different residences, including through a foreclosure rescue scheme. The Superseding Indictment expands on the allegations in the original six-count indictment, which was returned in May 2009, by including six new defendants and multiple new counts.
According to the Superseding Indictment, the defendants identified distressed properties that could be purchased at a low price, usually by targeting homeowners who had fallen behind on their mortgage payments and whose homes were facing foreclosure. In most instances, the defendants induced the homeowners to sell their homes to companies controlled by the defendants, including NNI, LLC, which was controlled by LAVETTE M. BILLS, and Recani Inc., which was controlled by WAYNE GREEN. These companies usually purchased the properties via "short sales," in which the lenders agreed to sell the properties for less than the balance owed on the loans and to discharge the remainder of the loans. The defendants then resold or "flipped" the properties to thirdparty straw buyers at a higher price, usually on the same day. In other instances, the defendants tricked the homeowners into deeding or selling their homes to other persons, by falsely promising the homeowners that title would be returned to them at a later date or telling the homeowners that they were merely refinancing their homes.
To accomplish this, the defendants also deceived the straw buyers and the lenders who were providing the mortgages to finance the purchases. In some instances, the straw buyers thought that they were helping the homeowner "save" his or her home from foreclosure, or they were told that they were purchasing an investment property. The straw buyers were also often told that they would not need to make mortgage payments on the properties, either because the payments would be made on their behalf, or because the payments would be covered by the rental income from the properties. The defendants convinced lenders to give the straw buyers mortgages to purchase properties the straw buyers could not otherwise afford by falsifying certain personal and financial information about the straw buyers. For example, the defendants prepared and submitted to the lenders documents containing false statements about the straw buyers' employment, income, and assets.
As a result of their fraud, the defendants profited from their "flips" of the properties; the homeowners lost title to their homes; the straw buyers became liable for hundreds of thousands of dollars in loans they were unable to repay; and the lenders suffered losses from those loans, which eventually went into default.
BILLS was the Chief Executive Officer of MTC Real Estate, Inc., in the Bronx, and KIRK LACEY, OMAR HENRY, and PETER CHEVERE, all worked for MTC during various periods. The defendants, through MTC, identified the distressed homeowners, recruited straw buyers, and prepared fraudulent documents for submission to the lenders. GREEN and SHERESE W. GLENN processed home mortgage loan applications through various mortgage brokerage firms operating in the New York City area on behalf of MTC and others. REVLON HINDS was the purported President of Recani Inc., and signed closing documents on its behalf. JOSEPH EVANS and JERRY CALONGE recruited straw buyers to obtain home mortgage loans in transactions processed by GREEN and GLENN. MARK BARNETT was a loan officer at Golden First Mortgage Corporation, who processed fraudulent loan applications for MTC.
United States v. Peggy Persaud, et al.
Eight defendants are charged in a 10-count Indictment in connection with an alleged mortgage fraud scheme involving over $23 million of fraudulently obtained loans from lenders through a mortgage brokerage called GuyAmerican Funding Corp. in Queens, New York. Three of the defendants, PEGGY PERSAUD, ORETTE KILLIKELLY, and GEORGE ESSO, were loan officers at GuyAmerican. PEGGY PERSAUD, as a manager of a branch office of GuyAmerican, received hundreds of thousands of dollars in commissions based on fraudulent loans submitted to lenders.
According to the Indictment, three of the defendants charged in the scheme, ELTON LORD, RAFICK BAKSH, and MAHAMOOD HUSSAIN, worked with GuyAmerican loan officers to recruit distressed sellers and straw buyers, flipping properties multiple times between different straw buyers, and stripping the equity from those properties as they were resold with inflated market values. For example, a property purchased by a straw buyer in December 2006 in Queens, New York, for $355,000 was resold to another straw buyer in April 2007—only four months later—for $680,000, to the benefit of the co-conspirators in the scheme. In addition, the defendants often arranged for a single straw buyer to purchase multiple properties within days or weeks of each other, without disclosing the prior purchases on the subsequent loan applications.
The loans submitted to the lenders allegedly contained numerous false statements about the straw buyers who often had little or no assets and modest or no incomes. Thus, the loans contained false statements about the borrowers' employment, income, assets and exiting debt. In addition, the loan applications purportedly falsely represented that the straw buyers intended to reside in the properties, when they did not. Two lawyers, CHEDDI GOBERDHAN and RAVI PERSAUD, who acted as the closing attorneys for most of the transactions and facilitated the fraud by allegedly disbursing illicit payments to co-conspirators, were also charged.
United States v. Beverly Johnson, et al.
Six defendants are charged in a one-count Complaint with conspiracy to commit bank and wire fraud in connection with their participation in a scheme to provide false information and documents to lenders for the purchasing and refinancing of properties. In total, the defendants allegedly obtained $5 million in loans on seven properties through fraud. Four of the defendants, a mother and her three daughters, BEVERLY ANDREA JOHNSON, a/k/a "Beverly Johnson," a/k/a "Beverly Samuels," a/k/a "Andrea Johnson," CARONE JOHNSON, a/k/a "Carone Johnson-Holt," a/k/a "Carone Morris," CARIANNE JOHNSON, and CARRELL JOHNSON, operated a title company called "Poui Land Services LLC" ("Poui Land"). Poui Land acted as the title agent for many of the closings charged as part of this case, generating significant fees for the defendants, including, in one instance, approximately $68,000. In some cases, the Complaint alleges that the defendants failed to record the mortgages on the properties, or to properly transfer the titles, which permitted the defendants to obtain additional mortgage loans on the properties. Furthermore, in some instances, the defendants refinanced properties in their own names, submitting applications to banks for loans that contained numerous misrepresentations regarding their own income and assets, all in an effort to strip the equity out of the properties through fraud. OLIVER ANDERSON operated a financial services company called "OGA Group," and purportedly provided fake employment verifications for some of the JOHNSONS' transactions. BRADLEY SKIERKOWSKI was a loan agent at Eastern American Mortgage who prepared fraudulent home mortgage loan applications on behalf of the JOHNSONS for some of the properties that are the subject of the Complaint.
United States v. Marlene Bossous, et al.
Five defendants are charged in a four-count Indictment in connection with an alleged mortgage fraud scheme involving over $13.5 million in fraudulently obtained loans through Southwest and Pro Capital, two mortgage brokerages. Between 2005 and 2008, the defendants allegedly conspired to obtain loan proceeds from numerous lending institutions on the basis of fraudulent applications, which included false information regarding the applicants' qualifications for the loans. In particular, MARLENE BOSSOUS and DAYANARA VELASQUEZ worked at those brokerages as loan agents and allegedly prepared the fraudulent loan documents. Another defendant, FAITH ESIMAI, operated a real estate agency called "Redeemed Realty" and recruited straw purchasers, in addition to preparing false and fraudulent loan applications for submission to lenders. In connection with the scheme, the defendants also conspired to create fake W-2s, pay stubs, and Certified Public Accountant certifications, among other documents, and to submit those documents to lending institutions to trick the lenders into issuing loans to individuals who otherwise would not have qualified for them. One of the defendants, NORMAN BARABASH, was a certified public accountant who created fraudulent employment and tax documents for a fee for submission with loan applications. HAROLD JOHN, a/k/a "Reverend John," also created false documents for submission to the lenders.
United States v. Danny Siony, et al.
Four defendants were charged in a twelve-count Indictment unsealed today involving over $6.8 million in allegedly fraudulent home mortgage loans obtained through a mortgage brokerage firm called Joshua Funding Corp. As part of the scheme, the defendants recruited and obtained home mortgage loans on behalf of at least six straw buyers to fund the purchase of more than 11 distressed properties in the New York City area.
According to the Indictment, DANNY SIONY, a/k/a "Rahim Siuny Kalimi," and SHIRIN KALIMI, a/k/a "Shirin Siouny," operated Joshua Funding Corp. through which they processed fraudulent loan applications for straw buyers recruited by SIONY, EMMANUEL ROY, and TARIFF DILL. In order to carry out the mortgage fraud scheme, SIONY identified and placed bids on properties that were for sale at auction, usually as the result of a foreclosure proceeding. SIONY, ROY, or DILL then recruited straw buyers for the properties, for whom the defendants obtained home mortgage loans through the use of false and fraudulent documents. KALIMI prepared and submitted the false and fraudulent documents to the lenders, including loan applications which misstated the straw buyers' employment, income, and assets, and falsified title reports and phony contracts of sale. In each instance alleged in the Indictment, the defendants represented to the lenders that a company controlled by SIONY, Australian Open, was selling the properties to the straw buyers at an inflated price when, in fact, the company did not hold title to the properties at that time and, in most instances, never held title to the properties at all. Once the defendants had obtained home mortgage loans for the straw buyers based on the inflated price, SIONY allegedly used the loan proceeds to pay off the auction price, caused the properties to be transferred to the straw buyers, and distributed the remaining funds amongst his co-conspirators.
The Indictment also charges ROY, an attorney licensed to practice law in the State of New York, who was paid to represent some of the straw buyers at closings. ROY also allegedly obtained a power of attorney for at least one of the straw buyers he recruited to the scheme and signed documents on the straw buyer's behalf.
United States v. Dean Reskakis, et al.
Three defendants are charged in a three-count Indictment with participating in a mortgage fraud scheme involving more than $6 million worth of fraudulent loans. As part of the scheme, the defendants sought and obtained home mortgage loans using straw buyers for homes at values that were well in excess of the prices at which the sellers agreed to sell the properties and well in excess of the prices at which the properties were actually sold. The defendants, including DEAN RESKAKIS, ADEOLU ADENIJI, a/k/a "Larry Ade," and SHARON FRIDAY, a/k/a "Sharon Friday Cudjoe," created fake documents, including phony contracts of sale, to trick the lenders into believing that the significantly inflated sales prices were accurate. The defendants recruited straw buyers to purchase the properties at the inflated prices by, among other things, falsely telling them that they were joining an investment club that would purchase and try to either operate or resell the properties at a profit. The defendants also submitted applications for home mortgage loans on behalf of the straw buyers with numerous false statements, including lies regarding the straw purchasers' income, assets, and employment. DEAN RESKAKIS, an attorney admitted to practice in the State of New York, served as the closing attorney or acted as such in connection with the fraudulent transactions. According to the Indictment, RESKAKIS allegedly distributed proceeds to the co-conspirators, and caused forged and fraudulent documents to be submitted to the lenders to make it appear as if transactions involving the target properties occurred as represented to the lenders in the home mortgage loan applications. SHARON FRIDAY, a/k/a "Sharon Friday Cudjoe," acted as an attorney for straw buyers of several of the target properties, even though she allegedly was not licensed by the State of New York to practice law. FRIDAY also purportedly recruited and met with straw purchasers.
In one transaction, for example, according to the Indictment, the defendants used a straw buyer, identified as Straw Buyer 1, to obtain home mortgage loans for the purchase of 404 West 145th Street, New York, New York, in the aggregate amount of approximately $1,920,000, with a purported purchase price of $2,400,000. The loan application submitted to the bank, JP Morgan Chase, for Straw Buyer 1 contained numerous false statements to improve his creditworthiness. However, 404 West 145th Street was actually purchased at or around the same time Straw Buyer 1 obtained the $1,920,000 in loans from JP Morgan Chase by an entity controlled by ADENIJI, "Joam LLC," for $1,250,000. The defendants allegedly used the mortgage loans obtained by Straw Buyer 1 to pay off the initial purchase by Joam LLC, and to enrich themselves. As alleged in the Indictment, the difference between the actual purchase price of $1,250,000 and the mortgage loans of $1,920,000 was the defendants' illicit profits from the transaction. To conceal the true nature of the transaction, the Indictment alleges that Reskakis caused to be prepared a fake settlement statement reflecting the sales price of $2,400,000.
United States v. Keren Misaghi, et al.
Three defendants are charged in a one-count Complaint with conspiracy to commit wire fraud, in connection with their obtaining a home mortgage loan in the approximate amount of $650,000 for the purchase of a property in Brooklyn, New York. In furtherance of the scheme, KEREN SADE MISAGHI, a/k/a "Karen Sade Misaghi," a/k/a "Karen Sade," purportedly completed a loan application on behalf of the purchaser that contained numerous false statements, including about the purchaser's income, assets, and employment. DAVID MISAGHI allegedly obtained a cashier's check from a bank account he controlled, which was then altered and used as a so-called "show check" at the closing for the transaction, falsely reflecting a large down payment by the purchaser. QUENTIN TUCKER was an appraiser who allegedly created an inflated appraisal for the property by, among other things, attaching photographs of a different location to the appraisal. After the fraudulent transaction closed, and to hide the scheme, KEREN SADE MISAGHI arranged for one month's mortgage payment to be made on the property.
United States v. Dustin Dente, et al.
DUSTIN DENTE and BRANDON LISI, both of whom are practicing lawyers, were charged in a one-count Complaint with participating in a scheme to defraud various lenders by obtaining mortgages through false and fraudulent information and statements. According to the Complaint, the defendants used straw purchasers to obtain the loans, and, in at least one instance, misappropriated the proceeds of those loans. The defendants are alleged to have fraudulently obtained home mortgage loans with a total face value of over $3.5 million, many of which are now in default and/or foreclosure.
The takedown of "Operation Bad Deeds" is the culmination of a series of investigations conducted by the United States Attorney's Office for the Southern District of New York, the FBI, the New York State Banking Department, the HUD-OIG, the USSS, the USPIS, and the FDIC-OIG.
Mr. BHARARA thanked all of the federal, state, and local law enforcement agencies involved in the investigation for their outstanding work. Mr. BHARARA also thanked the Kings County District Attorney's Office, the Queens County District Attorney's Office, the New York City Department of Investigation, the Department of Homeland Security's United States Immigration and Customs Enforcement, and the New York State Department of Insurance for their invaluable assistance. He added that the investigation is continuing.
The prosecution of the cases arising from "Operation Bad Deeds" is being overseen by the Office's newly-formed Complex Frauds Unit. The prosecution of United States v. Lavette Bills, et al. is being handled by AMY R. LESTER and JASON A. MASIMORE. The prosecution of United States v. Peggy Persaud, et al. is being handled by ANTONIA M. APPS. The prosecution of United States v. Beverly Johnson, et al. is being handled by JENNIFER E. BURNS. The prosecution of United States v. Marlene Boussous, et al. is being handled by AIMEE HECTOR. The prosecution of United States v. Danny Siony, et al. is being handled by AMY R. LESTER. The prosecution of United States v. Dean Reskakis, et al. is being handled by ZACHARY A. FEINGOLD. The prosecution of United -11- States v. Keren Misaghi, et al. is being handled by SEAN S. BUCKLEY. The prosecution of United States v. Dustin Dente, et al. is being handled by SEETHA RAMACHANDRAN and MICHAEL D. LOCKARD.
The charges contained in the various charging instruments discussed above are merely accusations, and the defendants are presumed innocent unless and until proven guilty.