Paul Watterson and John Bingaman pleaded guilty before U.S. District Judge of New Jersey Jerome B. Simandle to separate informations charging each with one count of conspiracy to commit wire fraud and one count of conspiracy to commit money laundering.
Court statements revealed that Watterson and his conspirators identified homes and overdeveloped condominiums in the Wildwood, N.J., area and recruited straw buyers to purchase these properties at inflated rates. The straw buyers had good credit scores but lacked the financial resources to qualify for mortgage loans.
Therefore, Watterson created fraudulent loan applications that contained false information about the straw buyers’ employment, income, assets and intended use of the housing units. The purpose of the scam was designed to make the straw buyers “appear more creditworthy” than they actually were in order to persuade lenders to approve them for the loans, said U.S. attorney Paul J. Fishman.
Once the loans were approved and the mortgage lenders sent the loan proceeds in connection with the real estate closings, Watterson’s conspirators took a portion of the proceeds, having funds wired or checks deposited into various accounts they controlled.
Overall, Watterson received $273,600 from five separate real estate transactions.
As part of the scam, Bingaman purchased three separate properties in Wildwood and Wildwood Crest and took more than $241,789 of the fraudulent mortgage proceeds he obtained from the lenders and deposited it into an account for Five Stone Development—a company he controlled.
Wire fraud is punishable by a maximum penalty of 30 years in prison and a $1 million fine, while money laundering conspiracy could be a 10-year jail sentencing and a $250,000 fine. Both defendants are expected to be sentenced next March.