New York Mortgage Broker Fraud Operation Found Straw Buyers For Own Properties, Inflated And Falsified Income, And Then Obtained Mortgages Which Quickly Went Into Foreclosure

13 12 2008

“…The two falsified documents to make it seem that the straw buyer made $23,000 a month – in fact, he parked cars for $22,000 a year, prosecutors said. The scheme unraveled when Poulard could no longer afford mortgage payments to the now-defunct American Brokers Conduit of Melville. She and Spindel pleaded not guilty…”

How prosecutors say the scheme worked:

1. LaDonna looked for phony buyers for three houses owned by him or his company.

2. LaDonna set the prices for the houses above their real value. The phony buyers used fake documents that say they have sufficient funds to be approved for mortgages.

3. The phony buyers obtained mortgages and completed the home sales in their names. The mortgage lenders paid LaDonna for his properties.

4. The phony buyers received $10,000 to $20,000 for participating in LaDonna’s scam. Only a few payments were made on the homes before they went into foreclosure.

 

http://www.newsday.com/news/local/suffolk/ny-limort125961867dec12,0,2469861,print.story

An ongoing probe into the home mortgage business by the Suffolk district attorney’s office has led to the indictment of a West Islip man on charges of scheming to defraud lenders out of about $2.5 million.

“What we’re seeing in Suffolk County is an explosion of fraud involving, depending on the scheme, every facet of the mortgage process,” District Attorney Thomas Spota said. The probe by Spota’s Mortgage Fraud Unit has resulted in 27 arrests and nine indictments since June.

In the latest case, Louis LaDonna, 39, pleaded not guilty Thursday to 13 counts, including grand larceny. Prosecutors accused LaDonna of inflating the value of houses in West Islip, Babylon and Lindenhurst owned by him or his company, LaDonna Properties.

But LaDonna’s attorney, William Keahon, said the case is weak. “Based upon the documents being given to me by the DA’s office and based on my own investigation, they’re never going to be able to prove what he’s accused of,” Keahon said.

Between 2006 and 2007, LaDonna contacted people who found “straw buyers” to pretend to buy the houses, prosecutors said. The straw buyers received payments of $10,000 to $20,000 for acting as if they were actually purchasing the houses.

“He [LaDonna] engaged appraisers to inflate the values of all of the properties well beyond what they were worth,” Spota said at a news conference.

Using fake documents, the phony buyers overstated their incomes and assets to qualify for no-down-payment mortgages, prosecutors said. When transactions were complete, the lenders – Mortgage-It and First Franklin Financial Corp. – paid LaDonna for the houses. But the lenders only received two or three mortgage payments before the houses went into foreclosure.

LaDonna was released on bail of $750,000 bond and is due back in court on Feb. 4.

Earlier this week, Marie Poulard, 50, of East Quogue, and Frank Spindel, 49, of Miller Place, were arrested on grand larceny charges.

Poulard needed $1.2 million to buy an East Quogue house she couldn’t afford. She and Spindel, her mortgage broker, arranged for a straw buyer to buy the house, prosecutors said.

“This is brokers making this thing work at any cost,” said Maureen McCormack, deputy chief of the economic crimes bureau in Spota’s office.

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