MICHAEL J. GARCIA, the United States Attorney for the
Southern District of New York, announced that DOMINICK DEVITO
pleaded guilty today in Manhattan federal court before United
States District Judge BARBARA S. JONES to participating in a
scheme to commit mortgage fraud and insurance fraud and to
obstruct justice. According to the Indictment, other documents
filed in the case, and statements made during the guilty plea
From January 2002 through November 2004, DEVITO was the
leader of a fraudulent real estate investment scheme, which had
as its primary objective the purchase of multimillion-dollar
residential properties in various communities in Westchester
County -- including Purchase, New York -- with loans obtained
through the submission of false and misleading information to
banks and other lenders. Many of the loans were for amounts
equal to or more than one hundred percent of the property’s
actual sale price, so that DEVITO and his co-conspirators did not
have to risk any of their own money in the transaction. DEVITO
identified properties for sale, orchestrated the purchase of the
properties, and performed construction work at the properties.
In furtherance of the fraud, DEVITO submitted to
various federally-insured banks loan applications, contracts of
sale, deeds, real estate transfer documents, title reports, and
other documents which contained materially false or misleading
information about the income, assets, existing debt and creditworthiness
of the borrower, the chain of title to the property,
and the sale price of the home. DEVITO and his co-conspirators
also indicated the borrower’s intent to reside in the property as
a primary residence, when the properties were typically purchased
for investment purposes.
DEVITO ultimately “cashed out” on certain properties by
taking additional private loans against the already fraudulently-
inflated sale price of the properties. The proceeds of these
loans, which were never repaid in full, were deposited in a bank
account used for DEVITO’s benefit.
As a result of DEVITO’s scheme to defraud, DEVITO
obtained millions of dollars in loan proceeds, and was able to
control certain properties that he otherwise would not have been
able to purchase and finance. The banks, on the other hand, lost
millions of dollars when DEVITO and his co-conspirators defaulted
on mortgage payments and caused several of the properties to go
In addition, from January 2003 through February 2005,
DEVITO engaged in a scheme to defraud insurance companies by
submitting false and misleading insurance claims and supporting
documents for water damage caused by broken pipes at several of
the homes he and his co-conspirators had purchased as part of the
mortgage fraud scheme.
Also, DEVITO obstructed justice in connection with his
sentencing in 2003 in Manhattan federal court after he was
convicted of racketeering and mortgage fraud in an earlier case.
Specifically, DEVITO submitted false and misleading information
regarding the value of his assets and his personal net worth
following his sale of a property located in Purchase, New York.
DEVITO, 44, pleaded guilty to one count of conspiracy
to commit bank fraud, one count of conspiracy to commit mail
fraud, and one count of obstruction of justice. He faces a total
maximum prison term of sixty years and mandatory restitution to
the victims of his crimes. DEVITO also agreed to forfeit a total
of $1.4 million. He is scheduled to be sentenced by United
States District Court Judge BARBARA S. JONES on October 24, 2008.
Of the four other defendants charged in the case, one
has pleaded guilty and the other two await trial, which is
scheduled for September 2, 2008. As to the defendants awaiting
trial, the charges are merely accusations, and the defendants are
presumed innocent unless and until proven guilty.
Mr. GARCIA praised the work of the Federal Bureau of
Investigation in the investigation of this case.
Assistant United States Attorneys KATHERINE R.
GOLDSTEIN and JONATHAN B. NEW are in charge of the prosecution.
SOURCE: United States Attorney's Office
Southern District of New York