Jacob Duetsch, 57, of Brooklyn, N.Y., pleaded guilty Tuesday to a charge stemming from a wide-ranging mortgage fraud scheme involving 24 mortgage loans on numerous multifamily housing properties in Hartford, Conn., totaling nearly $50 million.
U.S. Attorney for the District of Connecticut Vanessa Roberts Avery announced that Jacob Duetsch waived his right to be indicted and pleaded guilty before U.S. District Judge Omar A. Williams.
Jacob Deutsch and Aron Deutsch work at B.H. Property Management LLC (BHPM), a company that manages numerous multifamily housing properties in Hartford. Jacob Deutsch ran the day-to-day operations at BHPM, while Aron Deutsch coordinated maintenance and construction activities for the housing properties managed by BHPM.
According to court documents and statements in court proceedings, both men engaged in a scheme to defraud several financial institutions by providing them with false information overstating the value of multifamily housing properties managed by BHPM for loans secured by those properties. The institutions include government-sponsored enterprises Federal Home Loan Mortgage Company (Freddie Mac) and the Federal National Mortgage Association (Fannie Mae), and the U.S. Department of Housing and Urban Development (HUD).
As part of the scheme, according to court documents, Jacob Deutsch provided false rent rolls and falsified leases to the victim financial institutions and their appraisers, which either overstated the number of renters by listing fictitious names or others not actually living there, or falsely inflated the amount of rent paid by occupants. He also deceived inspectors into believing that unoccupied apartments were occupied by staging the apartments with furniture and requiring BHPM employees to falsely tell inspectors they lived there, and to lie to inspectors if asked whether there were vacancies.
In one example, Jacob Deutsch submitted a rent roll and income-and-expense summary to CBRE Capital Markets Inc. (CBRE) in June 2018 falsely representing that 16 Evergreen Ave. was 100% occupied when, in fact, no one lived there. He then emailed to CBRE pictures of money orders and checks purporting to reflect rent payments from fake tenants on the falsified rent rolls for 16 Evergreen Ave. to show proof of payment of rent when, in fact, the money orders and checks had been purchased by Aron Deutsch or BHPM employees at Aron Deutsch’s direction, court documents showed.
Jacob Deutsch also gave the victim financial institutions false and inflated income statements and financials for the properties; doctored bank statements; doctored or false documents overstating the purchase price of various multifamily housing properties; and doctored checks and invoices showing false or overstated capital improvements made to those properties.
This induced the victim financial institutions to issue loans they otherwise would not have issued on the requested terms, or for amounts larger than they would have authorized had they been provided with truthful information, Avery said. The false information allowed Freddie Mac and Fannie Mae to purchase the resulting loans from the victim financial institutions, and induced HUD to issue a mortgage insurance commitment to a victim financial institution, Avery said.
Jacob and Aron Deutsch were arrested on a criminal complaint on May 19, 2021. Jacob Deutsch pleaded guilty Tuesday to one count of conspiracy to commit mail fraud and wire fraud affecting a financial institution, an offense that carries a maximum sentence of 30 years. He was released in lieu of $50,000 bond pending sentencing, which is not yet scheduled.
Aron Deutsch, 61, of Monsey, N.Y., pleaded guilty to the same charge on June 1, 2022. He was released in lieu of $100,000 bond pending sentencing, which is scheduled for Nov. 3, 2022.
