Satmar Brothers from Williamsburg and Monsey Busted in BH Mortgage Scam

From the files of Larry Noodles, published by LM on 5.21.21

SATMAR BROTHERS BUSTED IN HARTFORD

Jacob Deutsch of Williamsburg and Aron Deutsch of Monsey own BH (Baruch Hashem) Property Management, LLC, a property management company that used to manage several multifamily housing properties in Hartford. They purchased 16 Evergreen Avenue, a 24-unit housing property, and 53 Evergreen Avenue, a 12-unit housing property in 2017 from a limited liability company based in China called Hong Ying Investment, which is owned by Yinghao Huang, Hongfen Yu, and Chao Liang Jia of Changzhou, Jaingsu, China, wherever that is. Hong Ying Investment, LLC took back mortgages from the Deutsch brothers totaling $912,000.00. Its not clear what the Deutsch brothers actually paid for the properties, but it must have been over a million bucks assuming they put down some kind of deposit.

In 2018 the Deutsch brothers applied for real mortgages, backed by the Federal Home Loan Mortgage Corporation, ie., Freddie Mac, to refinance the properties. They were just indicted for lying on their Freddie Mac mortgage applications. Not just little lies. Big, blatant lies.

The FBI had no problem building a case against Jacob and Aron Deutsch. It was the year of the rat. Their own employees ratted them out. Former employees of B H Property Management told investigators that Aron and Jacob instructed them to create fake rent rolls showing that the apartment buildings were 100% occupied, when in reality the apartment buildings were completely vacant. When inspectors from the bank went to visit the apartment buildings Aron and Jacob told their employees to purchase furniture and furnish the properties. The Deutsch brothers told their employees to put their old clothing into the apartments to make the apartments look occupied. Employees were told to create fake leases with fake electronic signatures. Employees were instructed to photo shop utility bills with the names of fake tenants. Jacob and Aron mailed themselves money orders, which they purchased with their own credit cards, in order to show rental payments. Chutzpah! If you are going to commit mortgage fraud don’t use your own credit card.

DeutschIndictmentDownload

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The Feiner Points for the Elderly – Rosewood Anyone?

FRAUD

Former Rosewood Owner Indicted on 10 Fraud Counts in Nursing Home ‘Ponzi Scheme’

The indictment represents the latest instance of legal trouble for Feiner, whose ownership of the Rosewood Care Centers portfolio resulted in the worst default — $146 million — in the history of the Department of Housing and Urban Development’s (HUD) loan program for health care facilities.

An administrative law judge last summer approved a nearly $1 million penalty against Feiner to resolve claims that the businessman and rabbi failed to file three years’ worth of necessary HUD paperwork associated with the portfolio.

The Securities and Exchange Commission (SEC) last September sued Feiner and Baver for defrauding investors; in that case, the government accused Feiner of using his position as a Chicagoland religious leader to advance the scheme.

“As such, he exploited those relationships by soliciting members of the Orthodox Jewish community to invest in his scheme,” the SEC wrote. “Baver also solicited investors from this community.”

Mark Yampol, who managed the portfolio of Rosewood locations in Illinois and Missouri, was indicted earlier this summer on a single count of equity skimming related to the portfolio.

The Rosewood default sent shockwaves through the health care lending industry when the New York Times first publicized the incident in June 2019.

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Biggest Mortgage Default in History, Nursing Home Rabbi Feiner Indictment

Ex-Owner in $146 Million Elder Care Default Is Charged in Ponzi Case

A Chicago-area rabbi, who formerly owned a nursing home chain at the heart of the biggest default in the history of a federal mortgage-guarantee program, has been indicted by federal authorities on charges he bilked millions of dollars from investors.

The indictment against Zvi Feiner and a business partner, Erez Baver, is the latest chapter in the yearslong saga involving the Rosewood Care Centers chain of nursing homes, which are mainly in the Chicago suburbs.

The $146 million default in 2018 was the worst ever for a program that insures mortgages on roughly 15 percent of the nation’s nursing homes. In the aftermath, the Department of Housing and Urban Development, which administers the mortgage guarantee program, tightened some of its underwriting and review processes.

The Rosewood chain — which has been renamed by the new owners — was part of a network of nursing homes that Mr. Feiner, 50, and Mr. Baver bought after raising money from investors in the Orthodox Jewish communities around Chicago and New York.

Continue here: The New York Times

Monsey, NY Banker and Toms River, NJ Man and Brilliant Straw-Borrower Scheme

 

Former banker from Monsey helped steal $1.4 million through loan scam: U.S. Attorney

A 61-year-old former bank director from Monsey faces federal fraud charges involving a scheme to obtain a $1.4 million loan from the financial institution to finance a home health care business, federal prosecutors said.

Tuesday’s indictment charges attorney Mendel Zilberberg and Aron Fried, 46, of Toms River, New Jersey, with filing loan documents based on false statements and misrepresentations through a “straw borrower,” U.S. Attorney Geoffrey Berman stated in a news release. 

Zilberberg and Fried received the loan through the fraud and used the proceeds, causing the Park Avenue Bank to default on $1 million, Berman said.

INDICTMENT from the U.S. Attorney’s Office

Scales of Justice (Photo: File)

The scheme involved an unnamed co-conspirator who received a share of the money from the loan and a fourth person, identified by prosecutors as a straw borrower.

“As alleged, Mendel Zilberberg and Aron Fried conspired with another to defraud the bank where Zilberberg served as a director,” Berman said. “In a textbook case of self-dealing and breach of fiduciary duty, Zilberberg allegedly exploited his position at the bank to grease the skids for a loan given under blatantly false pretenses, a huge chunk of the proceeds of which he himself dipped into.”

The indictment charges that in 2009, Fried and a co-conspirator sought to obtain a fraudulent loan from the Manhattan-based bank to finance an investment in a home health care business.

Knowing the co-conspirator would not be credit-worthy and had a criminal record, they used a straw borrower for the loan application.

To make the scam work, Fried and the co-conspirator partnered with Zilberberg, who had the authority to personally shepherd the loan through the bank’s approval process and guard it from scrutiny, according to the U.S. Attorney’s Office.

The defendants then concocted a false premise for the loan, supported the loan application with false representations, and set up pass-through bank accounts to funnel the proceeds of the fraudulent loan to themselves, the prosecutor’s office said.

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Brookly, NY Real Estate Scheme, Predatory Lending and Short-Selling, Homeowner Beware!

Five Guys Whose Brooklyn Real Estate Scheme Was Featured On “Million Dollar Listing New York” Just Got Arrested

The scheme, which centered on the neighborhood of Bedford-Stuyvesant, was first laid out in a BuzzFeed News investigation.

Five real estate investors whose business was the subject of a major BuzzFeed News investigation were arrested this week for allegedly defrauding lenders and taxpayers out of millions of dollars in a scheme that targeted New Yorkers at risk of foreclosure.

The US Attorney’s Office for the Eastern District of New York charged the men with conspiracy to commit wire fraud and bank fraud.

Two years ago, BuzzFeed News revealed how this group of investors turned properties on the brink of foreclosure into million-dollar listings sold on the reality TV show Million Dollar Listing New York.

Amid the lingering effects of the mortgage crisis, Iskyo “Isaac” Aronov and his four partners located homeowners in rapidly gentrifying neighborhoods who owed more than they could pay. The partners negotiated with banks to let the property go for far less than market rate, a process known as short selling. Then, with the original owners gone, the partners performed fast gut renovations, installing modern fixtures and marble counters, and resold the homes for north of a million dollars.

Prosecutors this week said Aronov and his team, which controlled every aspect of the short-selling process, traded on “false, misleading and incomplete” information, lying to the government and to lenders like Fannie Mae and Freddie Mac, failing to disclose unauthorized payments and their business relationships. BuzzFeed News linked the group to nearly 240 homes.

“As alleged, the defendants defrauded mortgage loan holders out of millions of dollars, with taxpayers saddled with much of the loss,” Richard P. Donoghue, United States attorney for the Eastern District of New York, announced.

In the process, the partners helped fuel the rapid gentrification of brownstone Brooklyn, displacing black and Latino families who in many cases had lived there for decades, and repopulating the area with young, mostly white professionals.

“What makes their alleged crimes even more egregious was their artificial devaluation of properties that, when resold or ‘flipped,’ resulted in large profits,” said Special Agent in Charge Christina Scaringi of the US Department of Housing and Urban Development’s Office of Inspector General, one of several agencies involved in the investigation. “Many of these homes were located in economically challenged areas of New York where affordable housing is at a premium.”

The indictment comes amid a larger crackdown on predatory real estate investment targeting New Yorkers who remain in foreclosure, dubbed an “epidemic of fraud” by an investigative grand jury last year. At least 20 people have been convicted in alleged scams. New York state also passed legislation this year meant to better protect homeowners who had been the target of predatory investment or fraud.

BuzzFeed News found at least 12 lawsuits in which borrowers said they had been deceived by the group.

In some cases, homeowners said the investors got them to sign over the deeds to their homes before the sales went through, claiming it was a normal part of the short-sale process. That gave the investors leverage to pay less, because no one else could buy the house — but this left some homeowners, like Denise Riera of the Bronx, on the hook for mortgages to homes they no longer owned.

Aronov appeared in court in Miami and his bond was set at $500,000, according to court papers. The four other men were arraigned in Brooklyn. Two of them also were released on bond, including Michael Herskowitz, a 40-year-old Brooklyn lawyer.

Since 2015, Herskowitz has been implicated in at least two other schemes targeting borrowers in foreclosure in Florida and Queens. He paid a $281,000 settlement in the Florida case and pleaded guilty to a disorderly conduct violation in the second.

Herskowitz’s attorney declined to comment for this story, citing the ongoing case. Neither Aronov’s attorney nor those for the three other defendants, Michael Konstantinovskiy, Tomer Dafna, and Avraham Tarshish, replied to requests for comment.

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Brooklyn Properties in Bankruptcy, Fraud and a Madoff-Style Property Ponzi Scheme – Clever Fraudsters

Clockwise from left: 119 Rogers Avenue, 325 Franklin Avenue, 53-55 Stanhope Street and 73 Empire Boulevard (Credit: Google Maps)

Amid fraud case, a bevy of Brooklyn properties end up in bankruptcy court

Nearly 20 limited liability companies for individual multifamily buildings that are linked to a federal fraud complaint are now bankrupt.

The filings late last month in a U.S. bankruptcy court in White Plains also relate to over a dozen foreclosure cases initiated by an affiliate of Maverick Real Estate Partners, which in court filings is seeking information on the identity of the owner behind the low-rise, residential properties, all of which are scattered throughout Brooklyn.

In April 2017, Israeli investors Jacob and Binyomin Schonberg, Binyomin Halpern and Raphael Barouch Elkaim alleged in a complaint filed in federal court in Brooklyn that Yechezkel Strulovich and Yechiel Oberlander defrauded them out of more than $20 millionin a scheme carried out “in the style of Bernie Madoff.”

Eleven properties that are now in Chapter 11 proceedings — located predominantly in the neighborhoods surrounding Williamsburg and Crown Heights — were also named as defendants in the fraud case against Strulovich and Oberlander. That case, which a judge dismissed in part and sent to arbitration in 2017, included more than 40 defendants, mostly LLCs that have not filed for bankruptcy.

The LLCs that are bankrupt and own the underlying Brooklyn properties all list David Goldwasser of GC Realty Advisors as their authorized signatory, according to court filings. GC Realty is described as a commercial real estate advisory firm, per its LinkedIn page, which notes that it is based in Boca Raton, Florida, and has offices in New York. The state’s Division of Corporations shows that GC Realty has an address in East Midwood, Brooklyn.

Goldwasser is also listed as a principal at FIA Capital Partners, which is also based out of Florida and New York, according to his apparent LinkedIn profile.

A message left with FIA was not returned by the time of this story. The firm specializes in acquiring distressed properties and portfolios, according to its website.

Questions over control

The series of bankruptcies filed in White Plains starting on May 20 show that all of the properties, which number at least 18, are also affiliated with 73 Empire Development LLC. The latter owns the ground lease on a roughly 30,000-square-foot development site — it’s currently a vacant one-story retail building — at 73 Empire Boulevard in Crown Heights.

Empire Development, which is one of the defendants in the fraud case against Strulovich and Oberlander, also filed for bankruptcy in February. The debtor’s plan, according to court records in White Plains, is to build a 58,000-square-foot, two-story retail property at 73 Empire Boulevard.

But the connection between Goldwasser’s GC Realty, Empire Development and the 18 other bankrupt properties is not yet clear. Maverick, the debt fund led by David Aviram that buys distressed mortgages, wants some clarity on the matter.

A recent filing from the debtors claims that one of Maverick’s affiliates, Brooklyn Lender LLC, took on 13 notes and mortgages — totaling $36 million — on 26 properties that originated with Signature Bank. As a result of the Chapter 11 filings, Maverick wants a judge to allow a full examination into who controls the various debtors, pointing to Goldwasser’s name in court documents.

“To Brooklyn Lender’s knowledge, Goldwasser was not previously involved with the Debtors, and understanding his new role and responsibilities with respect to these Bankruptcy Cases and the Debtors’ management is of paramount importance,” Maverick said in a recent filing.

Maverick noted that when the Signature Bank loans were made, Strulovich maintained that he was the 100 percent sole member of the debtor entities. In the fraud case, however, he admitted this was not the case. In October 2017, Maverick’s Brooklyn Lender filed 14 foreclosure cases against the now bankrupt properties, alleging that the loans were in default, in part due to misrepresentations by their owners.

The petition made by Maverick in bankruptcy court now asserts that a further examination is needed to determine who actually owns the Brooklyn properties, citing a guilty plea by Goldwasser to defrauding two banks in the early 2000s. Goldwasser was sentenced to 27 months in federal prison — Federal Bureau of Prisons records show he was released in September 2005 — and ordered to pay $2.8 million in restitution. A judge also ordered that Goldwasser “is not to be employed in any position requiring fiduciary responsibilities.”

All of the debtors in the bankruptcy cases, except Empire Development, have opposed the motion by Brooklyn Lender, claiming that its parent Maverick has an “unspoken agenda” and that they are working on a plan that includes paying back Maverick. Lists of unsecured creditors in the various bankruptcy cases show that Brooklyn Lender is owed between $2.7 million and nearly $5 million, while the New York-based law firm Abrams Fensterman is owed a little more than $150,000.

Mark Frankel, an attorney with New York’s Backenroth Frankel & Krinsky representing the debtors in bankruptcy proceedings, declined to comment, as did Maverick’s Aviram, which is being represented in bankruptcy court by Stroock & Stroock & Lavan. Strulovich and Oberlander could not be reached and their lawyers did not return requests for comment.

Unresolved fraud claims

In the fraud case against Strulovich and Oberlander, the defendants said that the money they received from the plaintiffs would be invested in Brooklyn properties that they would buy, develop and rent out, with returns on those investments coming in six to seven months. The plaintiffs also would receive 45 percent of the profits from the multifamily purchases.

But plaintiffs claimed that Strulovich, Oberlander and other defendants inflated the value of that real estate and used their money to acquire and develop properties for their own personal benefit, pay off personal debts and support their “lavish lifestyles,” according to the civil complaint filed two years ago. The Brooklyn sites purchased with their funds were “left to languish, undeveloped and dilapidated,” alleged the plaintiffs.

“The entire process was nothing more than an elaborate fraud to personally enrich the individual defendants,” said their lawsuit.

Court filings in that litigation claim that Oberlander allegedly approached the plaintiffs in early 2012 about investing in a project with him and Strulovich at 908 Bergen Street in Crown Heights. Oberlander sent prospectuses for 19 properties between 2012 and 2014 that were meant to entice the plaintiffs into make more investments, they asserted in the dispute.

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Morgan Management, Mortgage Fraud, Robert Morgan, Ponzi Scheme-Like Operation

Rochester developer Robert C. Morgan, photographed arriving at the Robert H. Jackson U.S. Courthouse in Buffalo Wednesday, has been charged with 46 counts of wire fraud, bank fraud and money laundering as part of what authorities assert was a conspiracy to defraud lenders and insurers out of hundreds of millions of dollars. Hickey/Buffalo News)

Effort to freeze Morgan assets, seize apartments could impact Buffalo properties

The U.S. Attorney’s Office wants to seize two Buffalo apartment complexes as part of its criminal case against Rochester developer Robert C. Morgan and three other defendants.

The Securities and Exchange Commission wants to freeze Morgan’s assets — including an investment fund that holds a loan for Morgan’s interest in a redevelopment project at Gates Circle.

One complication: Morgan isn’t the sole owner of either apartment complex. And his interest in the Gates Circle project is a partnership with another developer.

That could impact the other owners of all three properties who are not accused in the case.

Morgan, of Pittsford, was charged Wednesday with 46 counts of wire fraud, bank fraud and money laundering as part of what authorities assert was a conspiracy to defraud lenders and insurers out of hundreds of millions of dollars. The developer has amassed more than $3 billion in loans, of which prosecutors allege $500 million was fraudulently obtained.

Morgan’s son, Todd, was also charged in the case, along with Morgan’s financial director, Michael Tremiti, and mortgage broker Frank Giacobbe.

In a related but separate action, the SEC filed an emergency lawsuit accusing Morgan of running a Ponzi scheme-like operation, which allegedly raised money from investors for new real estate projects but then siphoned off and misused the funds to repay previous investors and loans.

The SEC says there’s not enough money to repay those investors — especially after $21 million in redemption requests from several of them early this year. So the agency sought emergency action to protect them, asking the court to freeze the assets of Morgan and his companies.

Forfeitures sought

Morgan’s companies, Morgan Communities and Morgan Management, own or manage 140 apartment complexes with 36,000 apartments in 14 states — including 3,500 units in the Buffalo area.

The government is seeking the forfeiture of 12 properties in New York and Pennsylvania. They include the Morgan Ellicott Apartments on William Street and Amherst Gardens on East Amherst Street.

Morgan, however, does not have full control of either property. Morgan is a co-owner of Morgan Ellicott Apartments along with Brett Fitzpatrick, and has no current ownership of Amherst Gardens, which is owned by Fitzpatrick and Aaron Siegel.

Prosecutors say Amherst Gardens was the subject of wire and bank fraud allegedly committed by Giacobbe, the mortgage broker.

Similarly, they accuse Giacobbe and Morgan of submitting fake records to get two loans on the Morgan Ellicott apartments.

Siegel declined to comment, as did his attorney, Jonathan Schechter of Gross Shuman.

Barbara Burns, spokeswoman for the U.S. Attorney’s Office, said that even a property that is not owned by Morgan or any of the current defendants is still “subject to forfeiture because it is part of the alleged bank fraud.” However, she said, if a judge orders a seizure, property owners who are not defendants in the case can file a separate action to prevent it.

Seizure of any property would affect only the ownership, not the tenants.

SEC wants to freeze assets 

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