NY AG Schneiderman Breaks Up Mortgage Fraud Ring
New York State Attorney General Eric T. Schneiderman has announced the indictment of two attorneys, an appraiser and two others for their roles in a mortgage fraud ring that operated for years and netted more than $1 million by preying upon first-time home buyers and institutional lenders. The five defendants bilked consumers by advertising a rent-to-own opportunity in which first-time home buyers with low credit were offered the chance to own their own homes with no down payments and no closing costs. The accused then took out fraudulent loans against those properties, conned lenders into believing they were paying off underlying mortgages, and then pocketed the money.
The 19-count indictment, unsealed yesterday in Onondaga County Court, charges attorney Theresa Sanders, a/k/a Theresa Hayes, most recently of Westerville, Ohio, and mortgage loan processor Tracie Clark of Wimauma, Fla., with Residential Mortgage Fraud in the Second Degree, a class C felony; five counts of Grand Larceny in the Second Degree, also class C felonies; three counts of Grand Larceny in the Third Degree, class D felonies; two counts of Scheme to Defraud in the First Degree, class E felonies, and eight counts of Falsifying Business Records in the First Degree, also class E felonies.
Clark was the final defendant arraigned on the indictment in Onondaga County Court before the Honorable Judge Anthony F. Aloi. The other four defendants were arraigned previously. Judge Aloi set bail for Sanders at $250,000 cash/bond. Also charged in various counts of the indictment were attorney Michelle Powers of DeRuyter, N.Y., and appraiser Steven Essig and Paul Sakowski, both of Syracuse.
If convicted, the defendants face up to 20 years in prison.
“Preying on innocent New Yorkers who want nothing more than an opportunity to buy their own home is repugnant,” said Attorney General Eric Schneiderman. “This office will continue to work diligently and collaborate with state and federal partners to ensure those who would exploit the system for their own financial gain feel the full weight of justice.”
The investigation leading to these indictments revealed an elaborate scheme in which Sanders purchased dozens of dilapidated homes in and around the City of Syracuse from the U.S. Department of Housing and Urban Development, and had some of them appraised for more than what she paid for them. After paying for the properties, Sanders then took mortgages out on each of the homes, usually in the names of her family members.
Armed with a new round of appraisals valuing the homes at unjustified values, the defendants applied for what they told lenders were refinance loans in the names of the prospective buyers, despite the fact that these buyers had never before owned the homes they were refinancing. Lenders, believing they were paying off underlying mortgages, wired closing funds to accounts controlled by the defendants, who then pocketed the money.
At the closings, buyers were surprised to learn that they would carry not one mortgage, but two—the second, which was not previously disclosed to them, was controlled by the defendants and varied in amounts up to more than $18,000. Believing they had no choice, buyers acquiesced to the "second mortgages" in hopes that they would be able to move forward as new homeowners.
To prevent discovery of their crimes, the defendants used a variety of excuses to withhold from the buyers the deeds to the properties, which caused the buyers to suffer numerous further hardships stemming from their difficulties in demonstrating that they were the rightful owners of the properties.
FMJ Job Listings
- Correspondent Lending Reviewer - NASA Federal Credit Union - , MD
- Mortgage Quality Control Specialist - NASA Federal Credit Union - Bowie, MD
- Mortgage Compliance Officer/Quality Control Manager - NASA Federal Credit Union - Bowie, MD
- Risk Model Development & Validation, Sr Associate (Financial Services) - PricewaterhouseCoopers - McLean, VA
- Retail Personal Banker Associate I. - Fifth Third Bank - Garfield Heights, OH
- Financial Center Manager III - Fifth Third Bank - MARION, OH