On December 1, 2016, the United States Attorney’s Office for the Southern District of New York, the New York Field Division of the Federal Bureau of Investigation, and the Department of Housing and Urban Development (HUD) announced the unsealing of indictments against five individuals for allegedly participating in a debt-elimination scheme that defrauded banks and homeowners. According to the indictment, the defendants would allegedly solicit homeowners with promises to discharge their mortgages for a monthly fee. The defendants would file fraudulent paperwork with local county clerk’s offices that purported to be mortgage discharge papers, but in fact had no effect. After those documents were filed, the defendants are alleged to have encouraged their clients to take out substantial second or reverse mortgages, some of which were under HUD’s Home Equity Conversion Mortgage Program. The defendants allegedly took a substantial cut of the proceeds from these mortgages. Victims would be left with both their original mortgages and the second or reverse mortgages. All told, the defendants are alleged to have filed fraudulent discharges for over $33 million of mortgage principal. The defendants are each charged with one count of conspiracy to commit wire fraud, bank fraud, and mail fraud, carrying a maximum penalty of 30 years in prison and a $1 million fine.
Blog Enforcement Watch December 06, 2016