Real Estate Agent Admits Guilt in Mortgage Fraud Conspiracy
Menachem Yosef Levitin, 27, New Haven, Connecticut, waived his right to indictment and pleaded guilty before United States Magistrate Judge Holly B. Fitzsimmons in Bridgeport to one count of conspiracy to commit mail fraud, wire fraud and bank fraud. The charge stems from Levitin's participation in a $10 million mortgage fraud scheme in New Haven, Connecticut.
According to court documents and statements made in court, from approximately October 2006 to November 2008, Levitin and others conspired to defraud mortgage lenders and financial institutions by obtaining more than $10 million in fraudulent mortgages for the purchase of more than 40 properties in New Haven. Levitin, a licensed real estate agent, identified most of the properties involved in the scheme and negotiated with sellers concerning the sale price.
As part of the scheme, the sellers agreed to accept a sale price significantly lower than the contract price. The lower sale price, which ranged from approximately $30,000 to $145,000 less than the contract price, was not disclosed to lenders from which the buyers obtained financing to purchase the properties. Levitin and his co-conspirators submitted to mortgage lenders false HUD-1 forms that often did not match another, undisclosed HUD-1 form that was actually used to disburse the fraudulently obtained proceeds at the closing. As a result of the submission of the false HUD-1 forms and other false documentation in support of the loan, including falsified monthly rental income and fictitious leases, the mortgage lenders would issue mortgages based on the inflated sales price.
Levitin and his co-conspirators used the fraudulently obtained mortgage proceeds to pay themselves and others.
In most of the fraudulent transactions, the buyers did not make any deposits or down payments for the properties they purchased. Rather, Levitin and his co-conspirators used some of the fraudulently obtained mortgage proceeds to cover the deposits and down payments. In addition, at or shortly after a closing, the borrowers would often receive several thousand dollars, although this payment was not disclosed to the lender.
Many of the houses purchased as part of this conspiracy went into default and have been foreclosed upon, causing losses of more than $7 million to lenders.
As part of the plea, Levitin agreed to forfeit his rights and ownership interests in 19 properties in New Haven and approximately $160,000. In May 2010, the government filed parallel civil forfeiture actions against real estate and currency in which Levitin had an interest.
Levitin was arrested on May 13, 2010.
Levitin is scheduled to be sentenced by United States District Judge Janet C. Hall on September 26, 2012, at which time Levitin faces a maximum term of imprisonment of 30 years and a maximum fine of approximately $20 million.
David B. Fein, United States Attorney for the District of Connecticut, announced the guilty plea.
This case is being investigated by the Federal Bureau of Investigation, the United States Postal Inspection Service, the U.S. Department of Housing and Urban Development – Office of Inspector General, and the Federal Housing Finance Agency – Office of Inspector General. The criminal case is being prosecuted by Assistant United States Attorney David T. Huang, and the parallel civil forfeiture cases are being handled by Assistant United States Attorney Julie G. Turbert.
The Connecticut Mortgage Fraud Task Force includes representatives from the U.S. Attorney's Office; Federal Bureau of Investigation; Internal Revenue Service – Criminal Investigation; U.S. Postal Inspection Service; U.S. Department of Housing and Urban Development, Office of Inspector General; Federal Deposit Insurance Corporation, Office of Inspector General, and State of Connecticut Department of Banking.
This case was brought in coordination with the President's Financial Fraud Enforcement Task Force, which was established to wage an aggressive and coordinated effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
source: Mortgage Fraud Blog