Friday, 25 March 2011 00:00
Nassau County District Attorney Kathleen Rice announced on March 16 that after a two-year investigation, her office has filed four indictments charging 17 people with more than 108 crimes for their roles in mortgage fraud and identity theft schemes that stole more than $20 million from homeowners, banks, and the county government. Rice said 16 defendants were arrested over a three-day span.
The New York State Banking Department offered significant investigative assistance.
The scheme was uncovered by the office’s Crimes Against Real Estate Unit, which Rice formed during the national economic and housing crisis in 2009. The indictment represents the largest takedown of mortgage fraud in Nassau County history. Fourteen of the 17 defendants are charged with Enterprise Corruption under New York’s Organized Crime Control Act (OCCA), and related crimes, including grand larceny, scheme to defraud, and falsification of business records.
Rice said that her office’s investigation, dubbed “Operation: Sweet Deal,” uncovered more than 45 independent acts of fraud. She said that the ringleaders, James Robert Sweet, 43, of Westbury, Dwayne Benjamin, 44, of Westbury, and their numerous co-conspirators, face charges ranging from enterprise corruption and first-degree grand larceny to money laundering, identity theft and conspiracy.
Among those arrested are lawyers, mortgage brokers, real estate brokers, bank employees, an appraiser, a financial consultant and one United States Postal worker.
Rice said that ‘Sweet Deal’ has operated in Nassau County for nearly six years under the leadership of Sweet and Benjamin.
The DA explained that initially, the scammers used straw buyers who were convinced by Sweet and his members to purchase properties in Nassau County, using their own personal information. Sweet told some of the straw buyers that they would be assisting sellers who were trying to sell their homes from foreclosure and/or that the homes would be a good investment opportunity, Rice said, but the straw buyers were actually assisting in helping the ‘Sweet Deal’ members to successfully perform their mortgage fraud schemes. ‘Sweet Deal,’ Rice said, would typically pay their straw buyers $10,000 for the use of their name and personal information.
Members of ‘Sweet Deal’ identified homes, which were either already for sale or in distress. The key to the scam, the DA said, was that unlike in a normal home purchase, ‘Sweet Deal’ negotiated with the sellers to purchase the properties at a higher price than the seller was asking. As part of the deal, ‘Sweet Deal’ arranged to keep the difference between the total amount lent by the bank and what the seller wanted as profit, Rice said.
The scam worked, the district attorney explained, because ‘Sweet Deal’ never intended to make any payments on the properties; they only intended to walk away with the profit. Most of the homes ended up in foreclosure.
Rice stated: “In one case, Sweet Deal actually purchased the same house twice in a two-week period. On Nov. 28, 2005, a Sweet Deal straw buyer took out a $390,000 mortgage to pay for a West Hempstead home. Sweet Deal members then took advantage of a delay in the filing of paperwork in the Nassau County Clerk’s Office, quickly “purchasing” the home again through a different straw buyer with a second $390,000 mortgage on Dec. 16, 2005, while the official paperwork still listed the home’s original owner.
“By doing this, Sweet Deal members were able to take out two $390,000 mortgages, using the cash from the first to pay off the original owners’ outstanding mortgage, and keeping the entirety of the second. After closing costs, Sweet Deal members walked away with more than $361,000. The house eventually went into foreclosure.
“Soon, however, the group began to branch out into more lucrative thefts by recruiting friends, family members, and co-workers to steal the identities of home buyers and property owners and to impersonate them at the closings.”
Rice said that using these stolen identities, ‘Sweet Deal’ members could impersonate both the home buyer and seller, and keep all of the proceeds of the phony home sale. In other words, she said, using a stolen identity, ‘Sweet Deal’ impersonators would secure a real mortgage and at the closing, another ‘Sweet Deal’ member would act as the homeowner, using a stolen identity of the real home owner.
The DA continued. “Once Sweet Deal members had stolen the mortgage proceeds, they had no reason to keep making mortgage payments and they let the property fall into foreclosure.
“Using this scheme, organization members were able to steal the entire proceeds of at least six home sales in the Westbury area.
“In order to accomplish this, Sweet Deal recruited individuals to impersonate the seller and buyer, whose identities had been stolen. Sweet Deal also assigned a member of Sweet Deal to impersonate a paralegal and also stole an attorney’s identity to set up a bank account to launder money through.
“Another scheme involved defrauding county government by renting some of the properties they had purchased through straw buyers before and during foreclosure proceedings. Some of the tenants qualified for low-income subsidies offered by Nassau County government programs. However, the programs would only issue the subsidy checks to the owners of record.
“Since the properties were held in the straw buyers’ names, members of Sweet Deal would not be able to collect the rent. Therefore, in order to collect the subsidies, several members of Sweet Deal submitted fake deeds to the program, indicating that they owned the properties, and stole more than $80,000 in undeserved subsidies.
“The criminal activity by these mortgage fraud schemers has now been brought to a screeching halt. Thanks to the meticulous and thorough work by prosecutors and investigators in my office we were able to pull down this $20 million house of cards. Mortgage fraud hurts every honest, hard-working citizen by making it more difficult for them to get good mortgage rates and destroys communities when houses fall into foreclosure and end up boarded-up or sold for less than their original value,” Rice concluded.
Assistant District Attorney Abigail Margulies, Chief for the Crimes Against Real Estate Unit, and Assistant District Attorney Nasreen Syed, are handling the case for the District Attorney’s Office.
Rice also thanked the New York State Banking Department, the Westchester and Kings County District Attorney’s Offices, the U.S. Postal investigators and the New York State Department of Motor Vehicles for their involvement in the investigation.