| |
New York - (December 4, 2007) - MICHAEL J. GARCIA, the United States Attorney for the
Southern District of New York, ANDREW CUOMO, the Attorney General
of the State of New York, and MARK J. MERSHON, Assistant
Director-in-Charge of the New York Office of the Federal Bureau
of Investigation ("FBI"), announced today the unsealing of an
Indictment charging MAURICE McDOWALL, ANDREA MOORE, ALEKSANDER
LIPKIN, a/k/a “Alex,” MARINA DUBIN, KERRI CLARKE, and MICHAEL
IRVING with participating in a wide-ranging "home foreclosure
rescue" scheme, in which they defrauded homeowners of the titles
to their homes and caused lenders to hold millions of dollars of
bad loans. MOORE, LIPKIN, DUBIN, and IRVING were arrested
earlier today, and McDOWALL was arrested on the charges earlier
in Puerto Rico. CLARKE remains at large. According to the
Indictment filed in Manhattan federal court:
From November 2003 through April 2005, the defendants
engaged in a fraud scheme targeting homeowners whose homes,
primarily in Brooklyn and Bronx, were in foreclosure or facing
foreclosure, by offering them a plan to "save" their homes. The
proposed plan included the refinancing of the homeowners' debt
with new, larger mortgages. Because the distressed homeowners
typically had poor credit and were not otherwise eligible to
refinance their debt at favorable terms, the defendants induced
them to "sell" their homes to third parties, or "straw buyers,"
who would apply for loans to be used to "save" the home. The
defendants promised that once the straw buyer obtained the
mortgage, the proceeds would be used to pay off the homeowners’
old debt and make one year’s worth of payments on the new loans.
The homeowners were told that, during that year, they could
continue to live in their homes and work on improving their
finances and credit. Finally, the defendants explained to the
homeowners that, at the end of the year, the title to their homes
would be returned to them by the straw buyers, with their credit
repaired and their homes saved. There were also cases in which
the defendants did not explain to homeowners that the plan to
"save" their home required them to deed their house to a third
party and did not obtain permission to deed the homes to others.
In such cases, the defendants effectively stole the property of
the homeowners by forging the homeowners' signatures on various
documents that transferred the homes to straw buyers without the
homeowners' knowledge.
The straw buyers, individuals with good credit scores
whom the defendants recruited to buy the homes facing
foreclosure, were typically told that they were helping someone
to "save" their home, and were paid a fee of up to ten thousand
dollars per property for taking out debt in their names. Once a
potential straw buyer agreed to participate in the scheme, the
defendants submitted loan applications to lenders on the straw
buyer's behalf. In submitting these applications, the defendants
regularly used documents containing false or misleading
information, including information concerning the straw buyer's
income, assets, and existing debt, to improve the straw buyer's
credit worthiness. In addition to false statements concerning
the straw buyers' financial profile, the defendants
misrepresented to lenders that the straw buyers intended to
reside in the property that would secure each mortgage or loan,
when, in fact, the properties were already occupied by the
distressed homeowners.
The defendants facilitated the funding, by various
banks and lending institutions, of over eighty home mortgages
and/or equity loans valued at over twenty million dollars. These
home equity loans and mortgages were often in amounts greater
than the homeowners' pre-existing debt and, in some cases, in
excess of the properties' actual values. The difference between
the amount of the new and old loans represented the defendants’
profit from the scheme. Furthermore, the defendants deceived
straw buyers by refinancing multiple properties in the names of
individual straw buyers, without fully disclosing this to them.
Thus, loans were taken out in the name of the same straw buyers
for up to four different properties. To minimize the risk of detection by any of the lenders, such loans were closed within a
short period of time.
At loan closing, after the homeowners' previous debt
was retired, the remainder of the loan proceeds were deposited
into bank accounts that the defendants controlled, rather than
used to make the monthly payments on the new loan as promised.
In some instances, the defendants failed to make even one payment
on the new loan, causing the loan to default immediately; in
nearly every other case, they eventually failed to make the
payments and defaulted on the loans, thereby "cashing out" on the
properties.
As a result, the homeowners lost the titles to their
homes and faced eviction, the straw buyers owed the lenders
hundreds of thousands of dollars that they were unable to repay,
and the lenders suffered losses from the defaulted loans.
Each defendant is charged with one count of conspiracy
to commit bank and wire fraud, and six counts of wire fraud. If
convicted, each defendant faces a maximum sentence of thirty
years in prison, on each count of the Indictment, and a fine of
the greatest of $1,000,000, or twice the gross gain or loss
resulting from the crime.
MAURICE McDOWALL was arrested on December 1, 2007 in
Puerto Rico and presented on the charges in federal court. The
defendants arrested earlier today are expected to be arraigned in
Manhattan federal court tomorrow at 10 a.m. before United States
District Judge ROBERT P. PATTERSON.
Mr. GARCIA praised the investigative work of the FBI.
He also thanked the Attorney General's Office for their
outstanding work in the investigation.
"The defendants charged today perpetrated a
multimillion dollar fraud in which they profited by preying on
the most vulnerable of homeowners," said United States Attorney
MICHAEL J. GARCIA. "While promising rescue from foreclosure,
they instead stole their victims' homes and millions of dollars
in loans secured by their victims' properties."
"This case is yet another example of the pervasive
fraud we have found in the mortgage industry," said Attorney
General ANDREW CUOMO. "My office investigated the scheme charged
in this case in response to complaints from individuals who had
been victimized and lost their homes. I applaud U.S. Attorney
GARCIA and his prosecution team for their excellent work and look forward to more productive partnerships with the Southern
District of New York."
"The rise in mortgage defaults associated with
sub-prime mortgage lending has created a target-rich environment
for so-called foreclosure rescue schemes," said FBI Assistant
Director-in-Charge MARK J. MERSHON. "We will continue to root out
the predatory practices of those who would victimize distressed
homeowners and unwitting lenders for a fast and easy (and
illegal) buck."
Assistant United States Attorney KATHERINE GOLDSTEIN is
in charge of the prosecution.
The charges contained in the Indictment are merely
accusations, and the defendants are presumed innocent unless and
until proven guilty.
SOURCE: United States Department Of Justice - Southern District of New York
|
