A federal indictment charged 11 individuals last week for their roles in a $15 million mortgage fraud scam that used straw buyers to make illegal profits on overbuilt condominiums in New Jersey.
All of the defendants involved in this scheme were charged with conspiracy to commit wire fraud.
According to the indictment, the defendants created false documents in order to convince lenders to give them $15 million for properties that were worth far less money. The conspirators located oceanfront condominiums overbuilt by financially distressed developers to purchase and negotiated buyout prices with the sellers of the properties.
The indictment said the defendants then caused the sales prices for these properties—located in Wildwood Crest and North Wildwood, N.J., as well as in Naples, Fla.—to be much higher than the buyout price to ensure large proceeds.
Additionally, two conspirators concealed the real sales price of these properties through inflated sales contracts and sale and finder fee agreements, the indictment claimed.
Straw buyers who eventually purchased these properties at inflated rates had good credit scores, but lacked the financial resources to qualify for mortgage loans. Therefore, the conspirators created phony documents such as W-2 forms, pay stubs, and bank and investment statements in order to make the straw buyers appear that their credit was worth more than it really was.
The fraudulent loan applications were submitted to mortgage brokers—who were also participants in this scam—who verified the straw buyers inflated income and assets, the indictment said. Once the loans were approved and the mortgage lenders sent the loan proceeds in connection with real estate closings on the properties, the conspirators wired the money into various accounts they controlled.
“Members of the scheme were willing to launder money in order to get their hands on the profits and cover their tracks,” said U.S. attorney Paul Fishman. “This case illustrates not only the seriousness of mortgage fraud, but also our focus on eliminating the criminal element from our markets to protect the health of our wider economy.”
The defendants charged in this scam include Willie Richardson, Sean Souels, Nancy Wolf-Fels, Deborah Hanson, Seth Fuscellaro, Larry Fullenwider, Angela Celli, Dwayne Onque, Timothy Ricks, Orlando Allen and Kinard Henson.
Wire fraud conspiracy charges carries a maximum penalty of 30 years in prison and a $1 million fine.
