In the following press release New Jersey Attorney General Anne Milgram announced that she has filed a fraud law suit against Casey Properties, LLC which was filed in Superior Court in Passaic County, the state’s four-count complaint [2mb] charges Casey Properties, headquartered in Totowa, and defendants Martin and Seth Gendel with running a scheme that involved soliciting people to “invest” in urban properties from 2005 through mid-2008. Victims of the Gendels did not actually put up money, but rather agreed to have properties purchased in their names in return for a share of the income generated by sale of those properties.
The Gendels told victims, falsely, that they could not simply buy the properties themselves because New Jersey law limited the number of properties they could own. They assured victims Casey Properties would collect the rent, pay the mortgage and perform maintenance on houses purchased in their names. However, the houses were left to deteriorate, mortgage payments were not kept up and the properties ended up foreclosed on and abandoned. One victim, a retired school counselor living on a fixed income, was left with ruined credit and two abandoned properties -– one in Newark and one in Paterson — that were so damaged she was unable to sell them. Among other things, the defendants are accused of submitting phony mortgage applications to enable her to qualify for loans she would not have otherwise obtained, and of forging her signature on various documents.
The defendants include
Seth and Martin Grendal who ran Casey Properties and Lee Alan, LLC
Francis T. “Frank” Memmo, of Medford, a mortgage solicitor for 1st Metropolitan Mortgage
Kelly Kotzker, of Evesham, a loan processor for 1st Metropolitan Mortgage
Damien Figueroa of Oak Ridge, an attorney who acted as a closing agent for both Casey Properties and the Gendels’ victims
Edward Evans, of Fair Lawn, an attorney who also acted as a closing agent
Nicholas Manzi, of Totowa, an attorney who acted as a closing agent
Robert B. “Barry” McBriar, a real estate appraiser who surrendered his license in October 2008 in connection with the conduct charged in the lawsuit.
The Casey Properties lawsuit charges defendants with a “pattern of racketeering activity” as defined by the New Jersey civil RICO statute.
Included in the civil RICO count are such predicate acts as theft by deception, falsifying records and issuing false financial statements, as well as accepting commissions on phony mortgage loans, forging documents and collecting rent monies that were to go toward mortgage payments, but keeping the funds instead.
[Ed. note, the following properties are mentioned in the complaint:
335-337 S. 20th Street, Newark
33 North Bridge Street, Paterson
43 -45 Godwin Avenue, Paterson
205 South 11th Street, Newark
51 Victoria Avenue
429 4th Avenue, Newark
37 Princeton St., East Orange]
Other charges in the Casey Properties suit include violating the Consumer Fraud Act by making false promises and engaging in unconscionable commercial practices. The complaint also includes a charge of creating and maintaining a nuisance by operating a scheme that resulted in dozens of run-down and uninhabitable properties, including many damaged by fire and/or flooding.
Attorney General Anne Milgram announced that a father and son were indicted with their real estate firms for allegedly stealing approximately $4.5 million from mortgage lenders by providing false information in home loan applications.
According to Criminal Justice Director Deborah L. Gramiccioni, the state grand jury indictment charges Martin Gendel, 64, of Montville, Seth Gendel, 35, of Long Island, N.Y., and the real estate firms they owned and operated, Casey Properties LLC, Lee Alan LLP and Andrea Management LLC, all based in Totowa. Each defendant is charged with conspiracy, theft by deception and two counts of money laundering, all in the second degree. The charges stem from an investigation by the Division of Criminal Justice Major Crimes Bureau.
The indictment was returned on Tuesday (Dec. 15) but was sealed until today, when the Gendels were arrested on the charges by Division of Criminal Justice detectives, assisted by local authorities. Martin Gendel was arrested at home in Montville and is being held in the Morris County Jail. Seth Gendel was arrested at home on Long Island and is being held in New York State pending extradition to New Jersey.
Between December 2005 and September 2007, the defendants allegedly deceived seven mortgage lenders into providing approximately $4.5 million in loans for purchases of 14 homes. Six homes were in Paterson, six in Newark and two in East Orange.
“We charge that these defendants falsified applications so unqualified home buyers could obtain $4.5 million in loans,” said Attorney General Milgram. “As detailed in a civil fraud complaint we filed earlier this year, the loans drove a scheme in which the defendants recruited investors to buy overpriced urban properties, then diverted loan funds for their own enrichment, leaving behind run-down homes and investors facing foreclosure.”
It is alleged that the defendants submitted fabricated information about employment and earnings in loan applications and on HUD settlement forms so that buyers could obtain loans for which they were not qualified. In some instances, they included false information about rental agreements and income from the properties. Nine buyers purchased the 14 homes.
In addition, the defendants allegedly deceived lenders by representing that expenses listed on HUD forms and ultimately paid out were legitimate expenses for home repairs when, in fact, no repairs were authorized or made. Some of the applications were checked off as though the homes would be the primary residence of the buyer, when the defendants knew they were being purchased solely as rental investment properties. Other false information submitted with the applications included false savings account balances and false occupancy letters.
Deputy Attorney General Francine Ehrenberg presented the case to the state grand jury. The investigation was conducted and coordinated for the Division of Criminal Justice Major Crimes Bureau by Sgt. Robert Walker, Deputy Attorney General Ehrenberg and Supervising Deputy Attorney General Terrence Hull, who is Bureau Chief.
“The Division of Criminal Justice has stepped up its prosecutions of complex white collar crime cases, including mortgage fraud and money laundering cases,” said Director Gramiccioni. “In these troubled economic times, we must be vigilant to prevent dishonest operators from defrauding lenders, investors and homeowners.”
Since June 2008, the Attorney General’s Office has filed a total of 11 civil mortgage fraud lawsuits naming 102 individual and corporate defendants whose actions have affected more than 950 victims, as well as property worth more than $29.1 million. The Attorney General has obtained indictments or guilty pleas in eight criminal mortgage fraud cases involving a total of 15 defendants. These defendants have been charged with victimizing more than 60 individuals and banks in connection with loans worth more than $15 million. In addition, the Attorney General has filed notices of violation against nine New Jersey-based companies for offering mortgage loan modification services without a debt adjustment license. They were assessed $45,000 in civil penalties ($5,000 each) and directed to pay consumer restitution.
Second-degree crimes carry a maximum sentence of 10 years in state prison and a $150,000 fine. The second-degree money laundering charges carry an enhanced fine of $500,000 and a potential anti-money laundering penalty of $250,000. The indictment is merely an accusation and the defendants are presumed innocent until proven guilty.
The indictment was handed up to Superior Court Judge Linda R. Feinberg in Mercer County, who assigned the case to Morris County, where the defendants will be arraigned at a later date on the charges.
The civil complaint filed by the Attorney General’s Office in March charges Martin Gendel, Seth Gendel, Casey Properties and Lee Alan LLP with violating New Jersey’s Civil Racketeer Influenced and Corrupt Organizations (RICO) statute. It charges the Gendels and six other defendants with using deception – and the credit information of their victims – to obtain fraudulent mortgage loans for the purchase of urban properties at grossly inflated prices. They convinced victims to buy homes in Newark, Paterson, Irvington and East Orange that were the subject of bogus appraisals, then profited by taking fees out at closing from the inflated equity.
The defendants told investors that Casey Properties would take care of all aspects of the sale and property management, including finding tenants, collecting rents, paying the mortgages and making needed repairs. However, Casey Properties never did maintain the homes or keep up the mortgage payments. In the end, victims had their credit ruined and were left responsible for dilapidated homes that had been foreclosed on and abandoned.