Ohio Attorney General Richard Cordray and Cuyahoga County Prosecutor Bill Mason have announced the details of an 18-month investigation that led to indictments against 41 people and four companies. The defendants are alleged to have engaged in real estate transactions to purchase 453 homes with fraudulent loans totaling $44 million. The indictments are the result of work done by the Cuyahoga County Mortgage Fraud Task Force operating under the authority of the Ohio Organized Crime Investigations Commission.
"Mortgage fraud has cost this country billions of dollars and has caused much of the nation's current economic hardship," said Attorney General Cordray. "This case clearly demonstrates the value of teamwork and sends the message that if you are engaged in mortgage fraud, we will come after you and prosecute you to the fullest extent of the law."
Uri Gofman of Beachwood, Ohio is alleged to have orchestrated one of the nation's largest mortgage fraud cases by enlisting family, friends and others to invest in his real estate company, Real Asset Fund, with promises of profit. Gofman's enterprise began with seed money from an investor who transferred funds from a bank account in Latvia. The scheme involved using straw buyers to purchase homes, falsely claiming home improvements were performed on houses in order to refinance them, and then selling houses to unqualified buyers with the assistance of real estate agents, mortgage brokers and title companies.
Lenders were tricked into believing that the buyers were making at least a 10 percent downpayment when they were not, that the buyers had assets when they did not, and that the properties were worth more than they actually were. Gofman and others defrauded lenders through loan application fraud, down payment fraud and loan distribution fraud. The defendants siphoned off more than $31 million in profits from their criminal enterprise. Eventually, 358 of the homes fell into foreclosure.
The following 11 defendants were indicted on mortgage fraud-related offenses including engaging in a pattern of corrupt activity, a first degree felony: Uri Gofman, Tony Viola, Igor Gofman, Kevin Landrum, Dave Pirichy, Dale Adams, Steve Greenwald, George Gardner and James Leoni along with Real Asset Fund, owned by Uri Gofman, and Karka Inc., also owned by Uri Gofman. The other 34 defendants were indicted on mortgage fraud-related offenses. Five defendants involved in this case were charged in December 2008 with mortgage fraud-related offenses in federal court: Uri Gofman, Paul Lesniak, Gennadiy Simkhovich, David Pirichy and Howard Sieferd Jr.
With funding from the Ohio Attorney General's Office and the Ohio Organized Crime Investigations Commission, the Cuyahoga County Mortgage Fraud Task Force was formed in December 2007. To date, 289 defendants have been indicted for approximately $111 million in fraudulent loans for 812 houses. Of the 812 houses, 616 fell into foreclosure.
Task Force members include: Ohio Organized Crime Investigations Commission, Cuyahoga County Prosecutor's Office, Ohio Bureau of Criminal Identification and Investigation, Cuyahoga County Sheriff's Office, Cleveland Heights Police Department, Solon Police Department, Beachwood Police Department, Pepper Pike Police Department, HUD Inspector General's Office, Cuyahoga County Recorder, Cuyahoga County Auditor, Cuyahoga County Treasurer, Ohio Department of Commerce-Division of Financial Institutions, F.B.I., U.S. Attorney's Office and U.S. Postal Inspector.
The Task Force continues to investigate this mortgage fraud case and additional charges are possible.
To see a complete list of the defendants and charges, click here.
For a breakdown by location of the homes involved in this case that ended up in foreclosure, click here.