Murder led prosecutors to “Operation Bankroll” Fraud Scheme
An investigation dubbed "Operation Bankroll" involving an assortment of schemes including money laundering, identity theft, mortgage fraud and larceny. The indictment charges that between 2006 and 2009, the defendants participated in a series of financial and real estate scams in order to steal and launder money from the clients of a law firm, as well as clients of an Abstract Company.
This indictment was a result of an investigation that was initiated after the July 2008 murder of attorney Mark Schwartz and his wife in their home. The person responsible for of that crime is still unknown, although the investigation into this murder led prosecutors and investigators to this large criminal conspiracy which appears they were involved with.
The defendants in this indictment recruited acquaintances to act as straw buyers in fraudulent real estate transactions. In order to launder the stolen money, they would forge and falsify documents then use stolen identities to open bank accounts at various financial institutions. They continually opened new accounts when they emptied their existing accounts by withdrawing and transferring of the funds. They would then invest, and re-invest, the illegal funds into different business ventures, vehicles and properties.
One of the schemes involved the embezzlement of more than $100,000 from various accounts from Schwartz law firm, including $50,000 belonging to one client. After demanding his money be returned, the defendants transferred money stolen from one of the Abstract Company clients into a another bank account, which was then used to pay back the client.
One of the other schemes involved using a straw buyer who provided a down payment using the defendants stolen client funds in order to complete a fraudulent sale of a home. The straw buyer using a host of falsified documents then obtained a mortgage, and the proceeds were used to pay off a prior mortgage of one of the defendant’s home and kept the rest of the money. The straw buyer never took possession of the property, one the defendants and his wife still live there.
Another scheme in 2007, one victim hired Schwartz law firm to arrange for the bonding of several mechanics liens on a property he had purchased, so he could refinance the property. He paid $133,000 to the Abstract Company to be held in escrow. After the liens were removed the victim never received the escrowed money back. In many other schemes, the escrow money was laundered through fake transfers, purchases and sales, including the purchase of a car wash they sold for a profit in March 2009.
Another of Schwartz law clients, a principal investor in a real estate development was to close on the sale of several condominiums; the investor placed approximately $270,000 into the Abstract Company escrow account to bond mechanics liens against the property by contractors. They then emptied and closed that account, leaving the mechanic liens active on the property.
The indictment charges that the defendants eventually turned on Schwartz and his wife then started stealing money from law firm. It states they took several blank checks from the law office and forged checks for hundreds of thousands of dollars. The first check did not go through because the bank called to authorize the transaction. The second check did go through because Schwartz and his wife were murdered before the bank could verify that transaction.
Kings County District Attorney Charles J. Hynes said, "These defendants thought they could bankroll their extravagant lifestyles by stealing from clients who trusted them, but as is often the case, they eventually turned on each other, robbing their own partners in crime, as well. My office will continue to work with the NYPD to determine who killed Mark Schwartz and Christina Petrowski."
An indictment is an accusatory instrument and not proof of a defendant's guilt. If convicted, the defendants face up to 25 years in prison. The investigation continues into the murders of Schwartz and Petrowskiv.
We should all congratulate the attorneys from the Rackets Division and Financial Investigator Neil Gillon, along with detectives from the 63rd Precinct and the Brooklyn South Homicide Squad. The case is being prosecuted by Laura Neubauer, Bureau Chief in the Rackets Division and Assistant District Attorney Wojciech Jackowski from the Rackets Division. Michael Vecchione is Chief of the Rackets Division.
We must be vigilant against fraud, recognizing its signs and taking proactive, definite, and realistic steps to not only prevent it but also punish it.
It starts with me.
It starts with you.
It starts with us…
You are all encouraged to report any suspected mortgage fraud activity to authorities.
Michael S. Richardson
Director/Mortgage Fraud Services
Author of "An American Epidemic, Mortgage Fraud a Serious Business"