Real Estate Developer Sentenced for Lying to Obtain Financing
Harold Rosen, 81, Clayton, Illinois, a real estate developer, was sentenced in US District Court to four years in federal prison on April 20, 2012.
Specifically, the defendant was sentenced to 48 months imprisonment, $700 special assessment, $66,449 in restitution to the city of East St. Louis and three years of supervised release following his prison sentence.
Rosen was convicted on October 27, 2011, for seven counts wire fraud. These offenses were committed in conjunction with attempting to obtain more than $1.9 million dollars of public financing for the failed Bowman Estates development project under false pretenses.
As previously reported by Mortgage Fraud Blog, Rosen admitted that he provided cash payments and a promise of future employment to Arthur M. Johnson, the director of the Community Development Department for the city of East St. Louis, to receive favorable treatment from the city as he attempted to develop the Bowman Estates project. Johnson pled guilty on May 20, 2011, to aiding and abetting Rosen's wire fraud and to bribery charges for accepting improper benefits in connection with business conducted by his office. Johnson was sentenced to 37 months imprisonment on November 8, 2011.
Rosen was convicted of seven counts of wire fraud in connection with his contract with the city of East St. Louis to construct a $5.6 million dollar low income, affordable housing project to be known as "Bowman Estates." To obtain the construction contract, Rosen lied about his background and experience, falsely portraying himself as a wealthy man with extensive experience as a developer. He supplied fictitious tax returns and bogus financial statements when he applied for bank loans, and he fabricated loan commitments and a financing contract to mislead the city and the East St. Louis Financial Advisory Authority (FAA) into believing that he had obtained more than $3.6 million dollars of private financing required as a pre-condition to the start of his construction project.
Having deceived the city as to his financial wherewithal and expertise as a developer, Rosen then attempted to pass off considerably cheaper prefab modular housing manufactured in the State of Indiana in lieu of the promised on-site construction in East St. Louis that would have provided job opportunities to local construction workers. Rosen also created phony invoices and lien waivers that were submitted to the city and the FAA in order to obtain reimbursement for expenses that he had not actually paid order to generate working capital for the project.
Rosen attempted to obtain more than $1.9 million dollars of public financing under false pretenses and he was successful in actually obtaining more than $60,000 by fraud. The East St. Louis Financial Advisory Authority ("FAA"), a state agency that oversees East St. Louis city spending, is credited for saving the city from additional losses by successfully blocking the expenditure of public funds from August, 2008, through June, 2009. The FAA also blocked the payment of a fraudulent $40,000 invoice.
United States Attorney for the Southern District of Illinois, Stephen R. Wigginton, announced the sentence.
The investigation was conducted through the Metro East Public Corruption Task Force by agents from the Internal Revenue Service, The US Department of Housing and Urban Development, and the Federal Bureau of Investigation. The case is being prosecuted by Assistant United States Attorney Steven D. Weinhoeft.
source: Mortgage Fraud Blog