Jose Salguero, Paul Chemidlin Jr., Delio Coutinho, Joseph DiValli, Christopher Ju, Carmine Fusco, Jose Martins, Yazmin Soto-Cruz and Kenneth Sweetman were all charged with conspiracy to commit bank fraud, U.S. attorney Paul Fishman said after arresting the individuals.
According to two complaints filed by the Department of Justice, the defendants engaged in multiple mortgage fraud conspiracies from March 2008 to July 2012 targeting at least 15 properties in the New Jersey cities of Newark and Elizabeth. The conspirators allegedly obtained the properties through fraudulent short sale transactions, short sale flips and identity theft, the complaints claimed.
The defendants supposedly submitted materially false mortgage loan documents to lenders in order to attain loan proceeds, which the defendants ultimately used for their own financial gain. Additionally, money was also acquired by the conspirators through various sales to straw buyers.
As part of the scheme, Salguero, Coutinho, Ju and Soto released liens on encumbered properties through fraudulently arranged short sale transactions, therefore earning money from the mortgage loans obtained from lenders for these acquisitions.
Another way the defendants gained money from lenders during this scam was to file gift letters that falsely stated the borrower was obtaining the funds to close the real estate transaction from a relative or friend. However, federal investigators said the funds used as the borrowers’ downpayments were actually provided by Salguero.
The complaints also state that the defendants submitted fabricated appraisal reports to justify inflated property values and secure mortgage loans in larger amounts. Furthermore, they formed limited liability companies similar to those of licensed title companies to be able to open bank accounts in the LLC names to conceal their identities and control the distribution of fraudulently obtained mortgage loan proceeds.
Each defendant faces a maximum penalty of 30 years in prison and a fine of $1 million for being charged with conspiracy to commit bank fraud.