New York Mortgage Brokers Use “Straw Buyers” And Fraudulent Income To Defraud Lenders And Fund Cocaine Distribution Ring

21 11 2008

“…Three of the defendants charged with mortgage fraud were also indicted for participation in a cocaine distribution ring, says a spokesman for the U.S. Attorney for the Eastern District of New York…”

“…the men would trick homeowners who were in danger of defaulting on their mortgages into signing over their property titles to Home Cash or Property Cash, after promising the victims they could prevent their homes from being foreclosed upon, prosecutors say…”

“…Once the properties were bought by the straw buyers they were often re-sold to another straw buyer who had also taken out fraudulent mortgage loans. The properties were then re-sold at inflated prices. The higher the price of the property, the higher the value of the loan straw buyers would ask lenders for, prosecutors say. ..”

http://www.longislandpress.com/articles/news/570/ 

Sixteen people were charged in a grand jury indictment that was unsealed on Nov. 19 with bilking mortgage lenders out of more than $13 million dollars in loans in connection with approximately 28 Long Island properties, according to federal prosecutors. Three of the defendants charged with mortgage fraud were also indicted for participation in a cocaine distribution ring, says a spokesman for the U.S. Attorney for the Eastern District of New York.

Immigration and Customs Enforcement investigators, along with members of the Organized Crime Drug Enforcement Task Force, uncovered the two separate fraud schemes and the drug ring. The complex scams involved mortgage brokers, real estate appraisers, loan processors, and a bank employee, Gloria Espenas, the former vice president of a JP Morgan Chase branch in Nassau County.

In the first alleged scheme, Robert Guerrero, owner of Property Cash in Greenlawn, and Gary Jacques, owner of Home Cash in Huntington Station, used their companies to purchase Long Island real estate. In some cases, the men would trick homeowners who were in danger of defaulting on their mortgages into signing over their property titles to Home Cash or Property Cash, after promising the victims they could prevent their homes from being foreclosed upon, prosecutors say.
 
In other cases, the men allegedly utilized straw buyers, or stand-in buyers with good credit to secure mortgage loans for properties that Guerrero and Jacques said they could not obtain by themselves. The loans for the properties―located in towns including Huntington, Huntington Station, Greenlawn, Bayshore and Uniondale―that were secured by “fraudulently overstating,” the straw buyers’ financial condition, authorities say.  Sometimes Guerrero or Jacques would deposit checks into the straw buyer’s bank accounts or tell the mortgage lender that the buyer worked for Home Cash or Property Cash and had a high salary, to give the impression that the buyer was financially sound, according to court documents.

Once the properties were bought by the straw buyers they were often re-sold to another straw buyer who had also taken out fraudulent mortgage loans. The properties were then re-sold at inflated prices. The higher the price of the property, the higher the value of the loan straw buyers would ask lenders for, prosecutors say. In this first scheme lenders were defrauded out of nearly $9 million in mortgage loans in connection with approximately nineteen different properties.

Allegedly complicit in the scheme is Michael McEnroe, who served as a
loan processor and mortgage broker for many of the fraudulent mortgage applications. Also involved was real estate appraisers Lawrence Albers and Al Cassiano, Jr., who inflated the value of properties, so as to deceive lenders into thinking they would have a valuable home as collateral if the buyers could not pay back the loan.

Three of the men charged for fraud in the first mortgage loan scheme were also charged with distributing and conspiring to distribute more than five kilograms of cocaine. Gary Jacques is charged with separate offenses involving the importation of more than 500 grams of cocaine into the U.S.

In the second scheme uncovered in the same investigation, Michael McEnroe and Ryan Gosin, who control the Able Group, Able Funding and Able Development, and Walmart Construction located in East Meadow and Baldwin at different times. The men allegedly used the companies to fraudulently acquire mortgage loans for LI property. The men also utilized straw buyers to acquire mortgage loans for property in Merrick, East Islip and Valley Stream.

Sometimes McEnroe and Gosin would pay the straw buyer between $5,000 and $10,000 for their participation. They also told the buyers they would make all mortgage payments on their behalf. Once the straw buyer agreed to buy the property they would provide McEnroe or Gosin with their personal information, such as their social security number and their date of birth to be used on the fraudulent loan application.

Espenas, the former JP Morgan Chase branch vice president, allegedly signed and provided fraudulent verification of deposit forms in which she overstated the value of the straw buyers’ assets on deposit at the bank, so their loan would be approved.

In this second scheme, lenders were defrauded of nearly $5 million in mortgage loans in connection with approximately nine different properties. Several of the properties in both schemes are now in foreclosure.

If convicted, the defendants face a maximum sentence of 30 years in prison on each count of bank fraud or conspiracy to commit bank fraud, 20 years for each count of wire fraud, money laundering, and conspiracy to commit wire fraud or money laundering. They also face 10 years in prison on the count of stealing government funds and up to life in prison on each count of trafficking in more than five kilograms of cocaine. Gary Jacques also faces up to 40 years in prison on each count relating to the importation of cocaine into the United States.
 

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