Fraud and Prevention

Ten Charged in New York Fraud Scheme as Part of "Operation Bad Deeds"

By James Comtois
October 21, 2009

As part of a massive crackdown on mortgage fraud crimes in the state of New York, 10 defendants have been charged with perpetrating a mortgage fraud scheme involving loans totaling over $5.6 million for at least 11 different residences.

Lavette M. Bills, Kirk Lacey, Wayne Green, Sherese W. Glenn, Revlon Hinds, Joseph Evans, Jerry Calonge, Mark Barnett, Omar Henry and Peter Chevere are the defendants charged in the indictment. The indictment expands on the allegations in the original six-count indictment, which was returned in May 2009 by including six new defendants and multiple new counts.

According to Preet Bharara, U.S. attorney for the Southern District of New York, the defendants, who could not be reached for comment, allegedly identified distressed properties that could be purchased at a low price, usually by targeting homeowners who had fallen behind on their mortgage payments and whose homes were facing foreclosure.

In most instances, the defendants allegedly induced the homeowners to sell their homes to companies controlled by the defendants, including NNI LLC, which Ms. Bills controlled and Recani Inc., which Mr. Green controlled. These companies usually purchased the properties through short sales, in which the lenders agreed to sell the properties for less than the balance owed on the loans and to discharge the remainder of the loans.

The defendants allegedly then flipped the properties to third-party straw buyers at a higher price, usually on the same day. In other instances, the defendants allegedly tricked the homeowners into deeding or selling their homes to others by falsely promising the homeowners that title would be returned to them at a later date or telling the homeowners that they were merely refinancing their homes.

To accomplish this, the defendants also allegedly deceived the straw buyers and the lenders who were providing the mortgages to finance the purchases. In some instances, the straw buyers thought that they were helping the homeowner "save" his or her home from foreclosure, or they were told that they were purchasing an investment property.

The indictment alleges that the straw buyers were also often told that they would not need to make mortgage payments on the properties, either because the payments would be made on their behalf, or because the payments would be covered by the rental income from the properties.

The defendants allegedly convinced lenders to give the straw buyers mortgages to purchase properties the straw buyers could not otherwise afford by falsifying certain personal and financial information about the straw buyers.

For example, according to the U.S. attorney's office, the defendants allegedly prepared and submitted to the lenders documents containing false statements about the straw buyers' employment, income and assets.

As a result of their fraud, the defendants allegedly profited from their flips of the properties, the homeowners lost title to their homes, the straw buyers became liable for hundreds of thousands of dollars in loans they were unable to repay and the lenders suffered losses from those loans, which eventually went into default.

Ms. Bills was the CEO of MTC Real Estate in the Bronx, and Mr. Lacey, Mr. Henry and Mr. Chevere all worked for MTC during various periods. Through MTC, the defendants allegedly identified the distressed homeowners, recruited straw buyers and prepared fraudulent documents for submission to the lenders.

Mr. Green and Ms. Glenn processed home mortgage loan applications through various mortgage brokerage firms operating in the New York area on behalf of MTC and others. Mr. Hinds was the purported president of Recani Inc., and signed closing documents on its behalf.

Mr. Evans and Mr. Calonge allegedly recruited straw buyers to obtain home mortgage loans in transactions allegedly processed by Mr. Green and Ms. Glenn. Mr. Barnett was a loan officer at Golden First Mortgage Corp., who allegedly processed fraudulent loan applications for MTC.

This case is part of "Operation Bad Deeds," a joint federal, state and local law enforcement operation targeting mortgage fraud crimes, which has resulted in 41 individuals being charged in eight separate mortgage fraud cases that collectively allegedly defrauded lenders out of more than $64 million in mortgage loans on more than 100 properties across New York State.