FBI sets up mortgage fraud hotline for New York area

If you believe that you have been a mortgage fraud victim, or you have any information you would like to report concerning a mortgage fraud scheme in the greater New York City metropolitan area, please call the New York FBI’s Mortgage Fraud Hotline (212) 384-2771 or send an email to nymortgagefraud@ic.fbi.gov with detailed information.


NC man pleads guilty in flipping scheme

In the following press release George E.B. Holding, United States Attorney for the Eastern District of North Carolina announced that in federal court today Maurice Eugene Jenkins, 41, of Wilson, North Carolina, pled guilty before United States District Judge James C. Dever, III, to bank fraud, in violation of Title 18, United States Code, Section 1344.

[Ed. note - We reported here that the North Carolina AG had shut down the operation before the criminal charges.]

A Criminal Information was filed on March 26, 2009. According to the Information, in approximately late 2002 to May, 2008, JENKINS devised a scheme to defraud Longleaf Community Bank, Wachovia Bank, New Century Bank, and Omni National Bank out of over $1,000,000.00. JENKINS, operating as Lessane Properties, LLC, would purchase residential real estate in Fayetteville and the surrounding area, targeting properties that he could purchase for below their tax value and then resell them to investors at the tax value. JENKINS would then obtain a loan from a bank on behalf of the buyer based on the tax value of the property. JENKINS then used part of the loan proceeds to pay off his loan, gave part of the loan to the buyers (his investors) and the rest JENKINS would keep as profit.

JENKINS would make false statements on HUD forms to the banks in order to secure loans for the buyers. He reported that the buyers were making down-payments for the loans. In reality, no down-payment was made, but rather buyers received a payment from JENKINS.
Mr. Holding commented: “This is the type of behavior that has cost all of us, creating toxic assets that harm, and putting our entire economic system in peril. My office will continue to prosecute these cases very vigorously.”

JENKINS faces a maximum penalty of 30 years imprisonment followed by up to five years of supervised release and a fine of up to $1,000,000.00. Sentencing is set for July 20, 2009.

Investigation of the case was conducted by the Federal Bureau of Investigation and the North Carolina State Bureau of Investigation. Assistant United States Attorney David Bragdon served as prosecutor for the government.


NJ woman sentenced to 10 years over real estate investment scheme

In the following press release Laurie Magid, United States Attorney for the Eastern District of Pennsylvania announced that Lizette Morice, 42, of Ewing Township, NJ, was sentenced today to 10 years in prison for running a fraudulent investment scheme involving fictitious foreclosures.

Morice pleaded guilty in July 2008 to seven counts of mail fraud. Between April 2006 and July 2007, Morice ran a company known as Gaddel Enterprises in Langhorne and Morrisville, Pennsylvania. She solicited investments in the company claiming that she was obtaining tax-foreclosed properties which she was reselling at a profit, promising clients a substantial return on their investment. No real estate transactions were ever conducted by Gaddel. To perpetuate the scheme, Morice paid early investors with other investors’ money.

“The crisis in the housing market made it easier for this defendant to sell her scheme to the victims,” said Magid. “This ten year jail sentence will sound a warning bell to investment scam artists who steal other people’s money.”

In addition to the prison sentence, United States District Judge Berle M. Schiller ordered Morice to pay restitution in the amount of $7,259,950, and to complete three years supervised release at the conclusion of her prison sentence.

The case was investigated by the United States Postal Inspection Service and the Federal Bureau of Investigation, and was prosecuted by Assistant United States Attorney Frank R. Costello, Jr.


Cranston, RI attorney disbarred - accused of theft of mortgage funds

Press reports and a Disbarment Order (08-212) by the Rhode Island Supreme Court reveal that on August 27, 2008 attorney Pasquale A. Scavitti III, of Cranston, RI “freely and voluntarily” consented to disbarment.

The State Bar began an investigation following a complaint from Wells Fargo which was followed by another complaint from a home owner regarding the closing of a refinance.

The order does not go into the detail as to why he was disbarred.

The Providence Journal quotes David D. Curtin the Supreme Court’s chief disciplinary counsel as saying that “Scavitti had stolen money from a total of 12 homeowners — in amounts ranging from $80,341 to $490,290”. “It’s a lot of money,” said Curtin, a 17-year veteran of the disciplinary counsel’s office. “This is the largest theft by a lawyer I’ve ever seen.”

[Print Version] [Link to report]

The Journal reports that the total reported stolen from closings of property transactions is $2,539,851.65.

A lawyer representing Scavitti indicated the money was gone but offered no explanation of where it went.

Scavitti, 46, of Cranston, has not been charged with a crime, his lawyers said. But Curtin said he has contacted the state police and the attorney general’s office, providing them with a package of information about Scavitti.

Scavitti has a personal law practice at 1225 Cranston St. in Cranston and has been practicing law since 1995, Curtin said.


St. Paul man indicted - accused of making false mortgage application

In the following press release the FBI in Minneapolis announced that a 41-year-old St. Paul man was indicted last week in federal court in connection with a scheme to obtain more than $163,000.

Angelo Mancini, III, was charged April 15 with one count of wire fraud. Mancini’s indictment alleges that on Sept. 19, 2006, he applied for a loan for the re-finance of his residence, which he was not financially qualified to obtain.

Mancini provided false statements on the mortgage application including, but not limited to, materially misstating the nature of his employment. Between 2005 and 2007, Mancini worked part-time as a mortgage broker for City Mortgage, a Little Canada-based business that obtains mortgages for consumers.

A loan in the amount of $163,709.80 was approved by BNC Mortgage based upon the false information provided by Mancini, and on Nov. 24, 2006, Mancini knowingly caused a wire transfer of $163,709.80 from BNC Mortgage.

If convicted, Mancini faces a potential maximum penalty of 20 years in prison. All sentences are determined by a federal district court judge. This case is the result of an investigation by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney David P. Steinkamp.


NY Senator Charles E. Schumer announces Fighting Real Estate Fraud Act

United States Senator Charles E. Schumer, joined by Manhattan District Attorney Robert Morgenthau, Kings County DA Charles Hynes, Queens DA Richard A. Brown, Bronx DA Robert T. Johnson, and Richmond County DA Daniel Donovan, today announced he is introducing new legislation to better protect homeowners from the recent wave of housing scams that are plaguing New Yorkers and homeowners across the country. The Fighting Real Estate Fraud Act of 2009 establishes a competitive grant program in the Department of Justice for local District Attorney’s offices to battle real estate fraud.

The bill authorizes $100 million in grants for hiring specialized staff, such as investigators, forensic accountants, and attorneys, to offices demonstrating need for increased resources to combat mortgage scams. Last month, Schumer secured $875,000 toward the creation of a Real Estate Fraud Unit through the 2009 Omnibus Appropriations Act at the Brooklyn DA’s office. Across the country, district attorneys, homeowner advocacy groups, state agencies and homeowners have had trouble investigating and prosecuting mortgage fraud cases due lack of staff and funding. The creation of Real Estate Fraud Units will resolve these issues by employing staffers who will be able to focus exclusively on real estate crimes that plague homeowners and prosecute scammers for their crimes.

“Housing scams are a nationwide problem and they require a nationwide solution,” Senator Schumer said. “Homeowners in New York and across the country have suffered for too long because of scam artists who feel they can take advantage of people without any repercussions. These fraud units will help protect homeowners from these criminals and ensure that rather than walking away from their crimes,they are prosecuted to the fullest extent of the law.”

“I congratulate Senator Schumer for having the foresight to introduce The Fighting Real Estate Fraud Act of 2009. Earlier this month I announced an indictment of a man for forging documents in an attempt to steal a Harlem brownstone and two years ago we convicted another for stealing over $800,000 in a mortgage financing scam, also involving a Harlem brownstone. With the help of grant money from this Act we will be able to open additional investigations and prioritize these important cases,” said Manhattan DA Robert Morgenthau

“Our mortgage fraud hotline in Brooklyn rings off the hook with cries from home owners who have been scammed out of their most precious possession. This legislation and the grant funding will go a long way towards protecting those victims and prosecuting those who prey on them,” said Brooklyn DA Charles Hynes.

“Mortgage fraud is an escalating problemthat leaves many victims in its wake– not the least of whom are oftentimes elderly homeowners whose properties go from being owned free and clear to being sold out from under them. While we have made some headway in prosecuting these cases, the problem is just too large to be addressed sufficiently with our current resources. Funding for a specialized unit would be a terrific addition in our continued efforts to battle these cases. I applaud and welcome Senator Schumer’s efforts in this regard,” Queens District Attorney Richard A. Brown said.

“While the vigorous prosecution of these economic predators is necessary in order to protect hard working citizens, even the preliminary stages of these investigations can be labor intensive and costly (gathering financial and other records, identifying suspects, and at times, assessing the competence of the victims). Therefore, we would greatly appreciate this federal assistance being proposed by Senator Schumer. It would be particularly welcome during these tough economic times when we are being asked to do more with less,” said Bronx DA Robert T. Johnson

“For far too many New Yorkers, the American Dream of homeownership has turned into a nightmare of foreclosure. In some cases, families have fallen victim to con-artists promising easy homeownership, or even worse, some families already facing foreclosure desperately turned to scammers offering financial relief, only to wind up in a worse-off situation. Where crimes have been committed, prosecutors are committed to pursuing justice. But to pursue these crimes, we need the resources to conduct the exhaustive investigations that are required. This bill, proposed by Senator Schumer, will go a long-way to helping us restore the American Dream for so many who have been victimized,” said Richmond County DA Daniel Donovan

In March, Schumer secured funding for the establishment of a Real Estate Fraud Unit at the Brooklyn DA’s office through the 2009 Omnibus Appropriations Act. Over the past several years, the Kings County District Attorney’s Office had been flooded with referrals of mortgage and deed fraud cases from local politicians, homeowner advocacy groups, attorneys, state agencies, and individual homeowners.While several investigations and prosecutions were undertaken, much of the increasing work load was referred elsewhere, making the system extremely unorganized and confusing. The Brooklyn DA’s office did not handle many of the cases due to lack of investigative and prosecutorial resources. Victims of mortgage fraud were generally referred to civil court to battle the scams because many groups believe this will allow victims to resolve their individual situations.Unfortunately, not enough headway had been made to combat the huge mortgage scam crisis that was taking over Brooklyn and New York City.

Increased prosecution of housing frauds is a necessary weapon in the arsenal of government programs to end the crisis currently manifesting itself in the foreclosure wave. Prosecutions can result in jail sentences for the offenders and restitution for the victims, which currently is very rare. The majority of housing fraud cases involve some degree of criminal conduct, such as theft of a home through a forged deed, a foreclosure rescue scam where a victim unwittingly signs over ownership of the house, falsification of borrower assets by a mortgage broker, or falsification of an appraisal report in order to close a loan that the borrower cannot actually afford.But uncovering the evidence of criminality requires investigative resources that are currently not readily available to victims. The Real Estate Fraud Unit in the Kings County DA’s Office’s Rackets Division was needed to address the problem.

After the establishment of the Brooklyn Real Estate Fraud Unit, Schumer recognized that the housing scam epidemic reached far beyond the borders of Brooklyn and will now introduce The Fighting Real Estate Fraud Act of 2009 that would protect homeowners nationwide.

Nationwide, mortgage fraud and deed theft cost homeowners $4 billion to $6 billion annually, according to the F.B.I. In New York City, housing fraud has wiped out tens of millions of dollars for thousands of predominantly black and Latino homeowners in large parts of Brooklyn, Queens and Staten Island.

The Fighting Real Estate Fraud Act of 2009 establishes a competitive grant program in the Department of Justice for local District Attorney’s offices to fight real estate fraud. Under this bill, real estate fraud includes crimes involving misrepresentations and forgeries to general applications, tax returns, and financial statements, appraisals and valuations, verifications of deposit and employment, escrow and closing documents, and credit reports. The Attorney General is authorized to make grants on a competitive basis through the Bureau of Justice Assistance to DA’s offices to assist them in investigating and prosecuting real estate fraud. The bill authorizes $100 million in grants for FY2010 and each year through FY2013. These grants will be used for hiring specialized staff to offices in need of specialized resources to combat scams.

Schumer added, “The recent foreclosure and refinancing crisis, following a sharp increase in home values created a perfect storm for these housing scammers to swoop in and fleece homeowners. With this bill, these criminals will be stopped.”


Todays existing case updates


New York man arrested - accused of obtaining $5 million in fraudulent sale

In the following press release Lev L. Dassin, the Acting United States Attorney for the Southern District of New York, and JOSEPH M. DEMAREST JR., the Assistant Director-in-Charge of the Federal Bureau of Investigation’s New York Field Division (“FBI”), announced today that MARK M. BENUN was arrested this morning on a criminal Complaint charging him with interstate transportation of a portion of the proceeds from the fraudulent sale, for more than $5 million, of a building at 161st Street in the Bronx. BENUN was arrested this morning at his Manhattan home by agents of the FBI.

According to the criminal Complaint unsealed today in Manhattan federal court: In June 2006, BENUN and another individual purchased the commercial property located at 67-79 E. 161st Street, for approximately $9.5 million. Payment was made with $4.5 million in cash, contributed by BENUN’s co-purchaser, plus a $5 million mortgage in favor of the seller, to be paid by BENUN and his copurchaser.

BENUN and his co-purchaser later obtained an additional $700,000 mortgage from the seller; BENUN additionally obtained a $2 million loan from a bank, guaranteed by his copurchaser and secured by a further mortgage on the property.BENUN had a 25% interest in the property, and his co-purchaser held the remaining 75%.

In February 2009 BENUN, purporting to be the sole owner of the property, sold it for approximately $5.96 million to another buyer, who paid $4 million in cash and gave BENUN a note for the remaining $1.96 million. Shortly after the sale BENUN sold the note, discounted, for $1.46 million. To establish his
apparent sole ownership of the building, BENUN created false satisfactions of the three mortgages on the property, and a fraudulent transfer of ownership of his co-purchaser’s 75% interest in the property to him. BENUN persuaded a notary who works across the hall from him to notarize the forgeries, claiming that the individuals whose signatures were on the documents were stuck in traffic. Funds from the sale were traced to an account in the name of BENUN’s company, MBM1 Owners LLC. Approximately $150,000 of those funds have been identified as being wired from MBM1’s New York account to accounts out of state.

BENUN, 35, of New York, New York, is charged with one count of interstate transportation of stolen property, which carries a maximum sentence of ten years in prison and a fine of the greater of $250,000 or twice the gross gain or loss resulting from the crime.

Assistant United States Attorney CHRISTOPHER D. FREY is in charge of the prosecution. The charges and allegations contained in the Complaint are merely accusations, and the defendant is presumed innocent
unless and until proven guilty.