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April 26, 2006
Brooklyn-Based Mortgage Fraud Scheme Busted
April 26, 2006 -- Eight people, including two lawyers, have been indicted in a residential mortgage-fraud scheme that netted them tens of millions of dollars, state Attorney General Eliot Spitzer said yesterday. Spitzer said the defendants used dozens of straw buyers - people who claimed to be buying property and offered false job, income and other information to get mortgages - in hundreds of bank transactions worth a total of more than $200 million. The defendants would inflate the cost of a property they wanted to buy by $100,000 or more, Spitzer said. They would then give the lending bank real estate appraisals that misrepresented the physical condition and the market value of the property and the identities of the people who prepared the reports, he said. To illustrate the scheme, Spitzer cited a $310,000 house purchase in January 2004 for which the defendants obtained a $450,000 mortgage. He said they paid the owner the $310,000, paid off another $20,000, some of it to the straw buyer, and pocketed $120,000. When they defaulted on the mortgage, the bank suffered the loss, he said. Spitzer said the defrauded banks included small, large, local and national institutions. "Virtually all of the major names are involved at one point or another," he said.
$200M House Louses [NY Post]
Update from Spitzer [Brownstoner]
Comments
Does anyone else find it amusing the names of those arrested are not printed? I wonder why?
Posted by: Eryximachus at April 26, 2006 9:20 AM
I don't think we should be too hard on them. I mean, money is being unjustly taken from people all the time. In this case, it just happened to be done in a way that's illegal. Hopefully the perpetrators have learned their lesson and will in future confine themselves to the many perfectly legal forms of theft. (They should simply have gone to medical school and they'd have avoided all this trouble!)
Posted by: Anonymous at April 26, 2006 9:33 AM
No, I think you're wrong.
Our society is thoroughly corrupt, and the number of producers is by far not large enough to support the large parasitic classes that exist in this country.
These subhumans enslave you and everyone else in this country.
Their days are numbered.
Such crimes should receive the death penalty, as it undermines the entire stability of our economic system.
Posted by: Eryximachus at April 26, 2006 9:43 AM
Stealing is wrong. Whether or not it's illegal is entirely incidental. I don't think we should condone any form of theft, whether it'll legal or illegal. However, to come down hard on these people when other, arguably worse, thiefs get off scott free seems absurd. Hell, just look at Dick Grasso. When he's hanging at the end of a rope, then let's talk about these small fish.
Posted by: Anonymous at April 26, 2006 9:53 AM
I have to admit, the thought of major banks being scammed brought a smile to my face.
Posted by: Ed at April 26, 2006 11:31 AM
Mine too! To hell with 'em!
Posted by: Anonymous at April 26, 2006 12:17 PM
As seductive as you might imagine it to be to scam millions from the banks, there is nothing cool, heroic or charming about this ring. The house across the street from me was involved in this scam, and I have a few guesses about the ongoing investigation. For one thing the house across the street from me was a lovely old brownstone in need of a good renovation, but full of details. In January there was a suspicious fire which engulfed the house and entirely gutted the building, endangering residents, neighbors and firefighters. This led to the investigation that linked it to this scam ring. From what I have heard, nothing has been or could be proved about who set the fire, but apparently it was not the only property involved in this scam that went up in flames.
Outside of that fact that having a burnt-out shell on the block is not great for the neighborhood, in general the effects for the rest of us brooklyn home owners are likely to include higher insurance rates and more difficulty getting loans approved.
"Louses" does not begin to cover it.
Posted by: ameraleed at April 26, 2006 1:18 PM
All of you people finding it attractive that the banks got scammed are idiots. Do you think the bank's shareholders pay for that? It's you fools that pay for it the next time you go to a bank and the interest rate is a 0.50% higher to compensate for the risk and closing costs increase because the appraiser will now need to be one of a select few firms that the bank trusts........
Posted by: Anon at April 26, 2006 2:22 PM
Yeah, but the interest rates would go up anyway. Screw the bastards.
Posted by: Anonymous at April 26, 2006 4:20 PM
Why haven't the names been printed?
Posted by: Anonymous at April 26, 2006 4:42 PM
The Times has nothing on this, but I did find this from the AG's site:
http://www.oag.state.ny.us/press/2006/apr/apr25a_06.html
Posted by: Anonymous at April 26, 2006 4:45 PM
here is the earlier story from the archives
http://brownstoner.com/brownstoner/archives/2006/01/one_womanizer_f.html
Eryximachus - the names of the indicted are listed on the Attorney general's press release. Probably pushed the word count of the story to list all 8 of them in the paper.
Posted by: ameraleed at April 26, 2006 5:02 PM
You do have a point there about the names. The paper always finds room to print the names of rape victims, underaged victims and suspects, as well as the name and picture of countless other people picked up as suspects, with far less evidence against them than the AG has on these guys. If they are can print everyone else's names, then they can find room to print theirs too.
Posted by: CrownHeightsProud at April 27, 2006 12:47 AM
A penny soul never came to twopence... Eleanor
Posted by: Eleanor at November 21, 2006 12:40 PM
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