ROCHESTER, N.Y., OCTOBER 4, 2007– Robert J. Amico, age 45, and brother Richard N. Amico, age 36, pled guilty yesterday to charges in connection with a mortgage fraud conspiracy in front U.S. District Judge David G. Larimer, U.S. Attorney Terrance P. Flynn of the Western District of New York announced today. Specifically, Robert plead guilty to conducting a continuing financial crimes enterprise and conspiracy to commit mail and wire fraud. He faces a mandatory minimum term of imprisonment of 10 years and up to life. Richard pled guilty to conspiracy and mail fraud. He faces a maximum term of imprisonment of 60 months.
Assistant U.S. Attorney Richard A. Resnick, who is handling the case, stated that in the plea agreements, the government contends that the advisory sentencing range for Robert is 121 to 151 months imprisonment. For Richard, the anticipated range is 60 months imprisonment. Each defendant agreed in the plea agreement to a restitution order of more than $15 million.
The defendants had previously pled guilty to filing federal tax returns. These convictions were not vacated. Robert has already spent approximately four years in prison, and Richard has spent appropriately three and one-half years in prison. The defendants will receive credit for this time toward their new sentences. The defendants are scheduled to be sentenced on January 8, 2008. .
On April 3, 2003, the defendants had been found guilty of various charges after a more than four month jury trial. On November 5, 2003, Robert was sentenced to 17 ½ years in prison and ordered to pay over $14.5 million in restitution, and Richard was sentenced to 9 years in prison and ordered to pay over $14.5 million in restitution. The defendants appealed the convictions alleging that the District Court Judge should have recused himself based on a conflict of interest. The Second Circuit Court of Appeals agreed with the defendants and vacated their trial convictions, which led to their guilty pleas today.
Assistant U.S. Attorney Resnick further stated that from January 1994 through January 2000, the defendants, and many others, including the defendants’ father, Robert A. Amico, conspired to defraud various federally insured banks and private lenders out of over $60,000,000 in mortgage loan proceeds in connection with the sale and resale of approximately 170 residential homes built by the Amicos. The object of the conspiracy was to obtain the mortgage loan proceeds by causing false documents and information to be submitted to the lenders to deceive the lenders into providing mortgage loans to purchasers who should have qualified for such loans, and in amounts which substantially exceeded the true value of the homes built by the Amicos. Approximately 89 individuals purchased homes from the Amicos.
The scheme to defraud the lenders required many participants. First, the Amicos found buyers of the homes by offering the homes for no money down. For example, a buyer would be told that they could purchase a home for $400,000 and that 100% of the sales price could be financed by a lender. This home, however, should have only been sold for $250,000. While the home was worth only $250,000, the Amicos would falsely represent to the lender that the sales price was $500,000 and that the purchaser was paying a down payment of $100,000 (20% down). The purchaser would then apply for a mortgage loan of $400,000 – the amount the purchaser believed was the sales price.
To support the inflated sales price, the Amicos solicited the services of property appraisers who prepared inflated property appraisals. The Amicos also created false property appraisals using names of property appraisers who did not exist.
As a result of the inflated sale prices and property appraisals, the lenders unknowingly provided mortgage loans in amounts which substantially exceeded the actual value of the homes. In the example above, the lender provided a mortgage loan of $400,000 for a home worth only $250,000 and which the lender believed was worth $500,000. Thus, the Amicos made an additional $150,000 on the sale and were able to easily attract a buyer for the home due to the non-existence of a down payment.
When many of the buyers ultimately defaulted on the loans, the lenders foreclosed on the properties and discovered for the first time that the property was worth much less than its sales price. The banks and lenders have foreclosed on approximately 120 properties, resulting in a loss of more than $15 million.
Assistant U.S. Attorney Resnick further stated that after finding buyers, the buyers were instructed to meet with Patrick J. McNamara, the Amicos right hand man, so he could assist them in preparing the mortgage applications and other supporting documentation required by the lenders to determine whether the buyers qualified for the mortgage loans. McNamara then prepared false mortgage applications for the buyers by, among other things, inflating the income and asset amounts. He used sophisticated computer equipment to alter and create false supporting documentation for the buyers, including, false tax returns, Forms W-2, pay stubs, bank statements, brokerage accounts and other financial documents for the purpose of making it appear to the lenders that the buyers had much more income and assets than they actually had so the purchasers would qualify for the large mortgage loans.
The Amicos then gave the false, altered and counterfeited documentation to the various mortgage brokers who were representing the lenders, including MFC Mortgage Company and its manager, Allan Peters; Capital Mortgage Network, Inc. and its owner, Debra Galled; and John Danaus of Lenders Choice Funding, Inc. The mortgage brokers than submitted this documentation to the lenders and falsely represented to the lenders that they had interviewed the purchasers and had personally obtained the supporting documentation being submitted with the mortgage applications. The mortgage brokers also misled the lenders into believing that they had obtained the appraisals, when in fact they had actually received them from the Amicos. The mortgage brokers, who played an integral part of the scheme, received fees in much larger than normal amounts for their role in scheme.
At the closings, the Amicos attorney, Joseph Chromic, then deceived the buyers into unknowingly signing false documents relating to the mortgage loans. At some of the closings, the lenders’ attorneys requested proof that a down payment was being paid by the buyers. Chromic would produce copies of checks he received from the Amicos which falsely represented that large down payments were being paid.
As a result, the various lenders provided over $60,000,000 in mortgage loans to purchasers of homes sold by the Amicos.
Sixteen other individuals have pled guilty in connection with this case, including Patrick
J. McNamara, two attorneys, an appraiser, an accountant, four mortgage brokers, and several purchasers of Amico homes. Robert A. Amico, the ring leader of the conspiracy, got sick during the trial and a mistrial was declared. He has subsequently passed away.
The convictions in this case were the culmination of an investigation by the Federal Bureau of Investigation under the direction of Special Agent in Charge Laurie Bennett, the Internal Revenue Service under the direction of Special Agent in Charge Ann Marie Coons, Criminal Investigation Division; and the United States Postal Inspector Service under Acting Inspector in Charge Joanne Yarborough.