New York, NY – February 6, 2009 – (RealEstateRama) – LEV L. DASSIN, the Acting United States Attorney for the Southern District of New York, announced that attorney ALEXANDER KAPLAN was found guilty today of participating in a multimillion-dollar mortgage fraud scheme. KAPLAN was found guilty, after a two-week jury trial in Manhattan federal court, on all eighteen counts in the Indictment against him. According to the evidence at trial, statements made in open court, and the Indictment:
From late 2004 through January 2007, KAPLAN and his coconspirators, using phony purchasers, or “straw buyers,” obtained hundreds of mortgage and home equity loans by submitting to various lenders loan applications and supporting documents that contained false information about, among other things, the prospective borrower’s employment, income and assets, and intent to reside in the property in question, as well as the fair market value of the property.
In addition, KAPLAN and his co-conspirators, using artificially inflated appraisals, sought and obtained mortgages and home equity loans at values that were in excess of properties’ actual sale prices and, thus, the properties’ true market values. The difference between the appraised value and actual sale price of the property represented, in the part, the profits from the scheme.
KAPLAN participated in the scheme by acting as a lawyer for the straw buyers and providing misleading and false information to the lenders. As shown at trial, concerning a block of ten rent-regulated condominium apartments at 243 West 98 th Street, on the Upper West Side of Manhattan (“the Apartments”), KAPLAN served as the attorney for the buyers and the banks in the closings of sales of the Apartments, supported by 100% financing. None of the documents submitted to the lenders in these transactions disclosed that: (1) certain buyers were seeking loans to purchase more than one Apartment as a “primary residence;” (2) each of the Apartments was already occupied by a tenant, and therefore not suitable for a primary residence; or (3) the Apartments were subject to rent regulation laws that precluded the buyer from charging the reported rents.
KAPLAN presided over the closings, and obtained for submission to the lender signed and completed false documents, including, among other things, loan application documents, on which each of the buyers indicated that the Apartment was to be a “primary residence,” and false affidavits stating that the buyers intended to occupy the Apartments.
Almost all of the Apartments were then resold, or “flipped,” to straw buyers within a matter of months. The purported sales prices for each of the flips was almost twice the initial purchase price, and KAPLAN’s co-conspirators obtained almost $13 million in additional loans on the Apartments by submitting false information and documents to the lenders.
KAPLAN served as both the buyer’s and seller’s attorney in connection with the flip transactions, drafting sham contracts of sale and other documentation. KAPLAN also served as the attorney for the banks in connection with certain of the flip transactions, and distributed a portion of the loan proceeds to his co-conspirators.
KAPLAN, of Brooklyn, New York, was found guilty of one count of conspiracy to commit bank, wire, and mail fraud; six counts of bank fraud; eight counts of wire fraud; and three counts of mail fraud. The conspiracy count carries a maximum prison sentence of 30 years and a fine of $1 million or twice the gross gain or loss resulting from the offense. Each of the substantive bank, wire, and mail fraud counts carries a maximum prison sentence of 30 years and a fine of $1 million or twice the gross gain or loss resulting from the offense.
KAPLAN is scheduled to be sentenced by United States District Judge RICHARD J. HOLWELL on May 1, 2009.
Of the 26 other defendants originally charged with KAPLAN in United States v. Aleksander Lipkin, et al., 25 have pleaded guilty. The case against JOHN CIAFALO remains pending.
Mr. DASSIN praised the investigative work of the Federal Bureau of Investigation, New York City Police Department, and Department of Homeland Security’s U.S. Immigration and Customs Enforcement.
Assistant United States Attorneys JONATHAN B. NEW, KATHERINE R. GOLDSTEIN, and AVI WEITZMAN are in charge of the prosecution.
The charges and allegations contained in the Indictment against CIAFALO are merely accusations, and the defendant is presumed innocent unless and until proven guilty
