Two Connecticut men face multifamily mortgage fraud allegations

Two property management company employees allegedly defrauded Freddie Mac and CBRE Capital Markets by submitting false information to apply for a multifamily loan, according to a press release issued by the U.S. Attorney’s office in the District of Connecticut on Wednesday.

Jacob and Aron Deutsch, employees of BH Property Management LLC, were charged with federal conspiracy, fraud and false statement offenses related to the refinancing of a mortgage on two Hartford properties. More specifically, the two were arrested based on charges of mail and wire fraud and making false statements. Both have been released on bond after appearing before a judge via videoconference. Jacob’s bond amount was $50,000 and Aron’s was $100,000. Aaron coordinated maintenance and construction activities for BHPM’s properties and Jacob was responsible for its day-to-day operations.

While refinances that have been more prevalent recently are generally considered less prone to fraud than initial purchase transactions, the allegations are a reminder that misrepresentation still can occur in this sector of the market.

In this case, the borrowers’ alleged falsifications included misrepresentations about the occupancy of one of the buildings on a rent roll income and expense summary submitted when they applied for a small-balance multifamily loan of nearly $2.2 million. Specifically, representations were allegedly made that the apartment building with 24 units, 16 Evergreen Ave., had a 100% occupancy rate in 2018 when in actuality there was not a single tenant living there at the time. The other property involved, 53 Evergreen Ave., had 12 units.