NEW YORK – May 21, 2008 – An indictment was unsealed this morning in federal court in Brooklyn, N.Y., charging 11 defendants for their participation in a scheme to defraud mortgage companies and banks of more than $14 million, announced Benton J. Campbell, U.S. Attorney for the Eastern District of New York; Mark J. Mershon, Assistant Director-in-Charge of the FBI New York Field Division; and Jon T. Rymer, Inspector General of the Federal Deposit Insurance Corporation (FDIC).
The scheme’s organizers, Vijay Anand Khemraj and Robert Rodriguez; recruiters of “straw buyers” David Burks, Eric Whiteside, Simon Clark and Harlem Guzman; real estate agent Venecia DeSilva; mortgage brokers David Cho and Mark Matthews; and attorneys Frantz Metellus and Robert B. Davis are all charged with conspiracy. The attorneys, mortgage brokers and organizer Khemraj are also charged with wire fraud and bank fraud. The defendants’ initial appearances and arraignments are scheduled late today before U.S. Magistrate Judge Roanne L. Mann at the U. S. Courthouse in Brooklyn. The case has been assigned to U.S. District Judge Jack B. Weinstein.
The indictment alleges that Khemraj, Burks, Whiteside, Clark and Guzman recruited straw buyers with good credit ratings to purchase residential properties located in Brooklyn, Queens and the Bronx by promising that, among other things, rental incomes from the properties would ensure that the purchasers would never have to make payments on the mortgages or take possession of the houses. Once the buyers were signed up, mortgage brokers Cho and Matthews generated false documents for the buyers to support inflated income and asset statements in the mortgage applications.
While the so-called buyers were being recruited, Khemraj, Burks, DeSilva and Clark identified run-down properties for sale within the range of $250,000 to $500,000. Rodriguez signed sales contracts to buy all of these properties, but by the time of the closings he assigned his rights to purchase the properties to the straw buyers for fees totaling up to $600,000. The straw buyers’ mortgages – which had been secured through fraudulently inflated financial statements – covered both the sales prices and the assignment fees. The banks and mortgage companies, however, were never made aware of the assignments or the true market value of the purchased properties. The mortgage proceeds were wired into the attorney trust accounts of Metellus and Davis, and subsequently distributed to the other defendants.
Between July 2005 and February 2008, at least 24 mortgages were secured through this scheme. The total amount of the mortgages exceeded $14 million.
“Earlier this month we announced the formation of an EDNY task force comprised of federal, state and local law enforcement agents and investigators to address the burgeoning problem of mortgage fraud in the Eastern District of New York,” stated U.S. Attorney Campbell. “Investigating and prosecuting mortgage-related fraud is a priority program, and we and our partners in the task force are determined to bring to justice those who line their pockets at the expense of mortgage lenders.”
FBI Assistant Director-in-Charge Mershon stated, “This mortgage fraud conspiracy included straw buyers, corrupt loan officers, a real estate agent and law-breaking lawyers. The defendants worked in concert to deceive victim lenders out of millions of dollars. The FBI, the U.S. Attorney, and our law enforcement partners will be working in concert to put a halt to such conduct.”
FDIC Inspector General Rymer stated, “I am pleased that the FDIC Office of Inspector General can play a key role in ensuring the integrity of the financial services industry. By partnering with our law enforcement colleagues, we leverage the resources needed to successfully combat mortgage fraud and rid the industry of those seeking to undermine the safety and soundness of our financial institutions and other legitimate businesses involved in mortgage lending.”
The maximum term of imprisonment for any defendant convicted of wire fraud or conspiracy to commit wire fraud is 20 years. The maximum term of imprisonment for any defendant convicted of bank fraud or conspiracy to commit bank fraud is 30 years.
The charges announced today are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
The government’s case is being prosecuted by Assistant United States Attorney Patrick Sean Sinclair.
