A New York real estate developer who led a mortgage fraud conspiracy resulting in more than $98 million in losses was sentenced in U.S. District Court in Brooklyn to serve nine years in prison.
Thomas Kontogiannis was sentenced for conspiracy to commit bank fraud against Washington Mutual Bank and DLJ Mortgage Capital, a subsidiary of Credit Suisse. He purchased and subdivided two tracts of land in Brooklyn and Queens called Loring Estates and Edgewater Development and then staged sales of the assets that were financed by mortgage loans to straw buyers.
Kontogiannis directed others to prepare false loan files to make it seem as if the straw buyers were homeowners that had good credit. The mortgages were supported by fraudulent appraisals that depicted finished homes. However, the buildings had not been built or had false addresses.
The mortgage files also contained inaccurate title abstract reports and other documentation designed to indicate that the seller, a Kontogiannis-controlled entity, had the rights to clear title and that the lender's interest was protected by title insurance.
Lenders Kontogiannis controlled including Interamerican Mortgage Corp., (later known as CIP Mortgage Corp.) and Coastal Capital Corp., financed the loans used in this scheme.
After the loans were closed, Kontogiannis ensured that the mortgages and deeds were not recorded, thereby permitting him to “sell” the same property repeatedly. Eventually, Kontogiannis sold the loans to Washington Mutual or DLJ Mortgage Capital.
In order to conceal the multiple sales of the properties, Kontogiannis changed the addresses of the assets. In addition, he told other conspirators to make monthly payments on the mortgages to ensure that none of the mortgages became delinquent.
Mortgage payments were stopped in 2007 with approximately $98 million in principal outstanding.
Kontogiannis pleaded guilty to the crime in October 2010 along with seven co-defendants who participated in this scheme.
