Second former mortgage broker pleads guilty to multimillion-dollar mortgage fraud scheme involving over 50 residential properties
FOR IMMEDIATE RELEASE
October 5, 2011
TRENTON N.J. – A former mortgage broker admitted today that he participated in a mortgage fraud scheme which defrauded lenders and generated millions of dollars in fraudulent mortgage loans, U.S. Attorney Paul J. Fishman announced.
Frank Corallo, 38, of Maywood, N.J., pleaded guilty to an Information charging him with one count of conspiracy to commit wire fraud. Corallo and Eddie Dukhman, 35, of Sewaren, N.J., were arrested October 21, 2010, and charged in a criminal Complaint which alleged they conspired to defraud mortgage lenders of over $7 million by conducting more than 50 fraudulent real estate transactions involving New Jersey residential properties. Another co-conspirator and former mortgage broker, Ara Mesropian, 39, of Paramus, N.J., pleaded guilty on July 28, 2011, to participating in the same conspiracy and awaits sentencing. Corallo entered his guilty plea today before U.S. District Judge Peter G. Sheridan in Trenton federal court.
According to documents filed in the case and statements made in court:
Corallo admitted that as a former mortgage broker, he and Dukhman, who was supposedly in the real estate business, engaged in a conspiracy to defraud mortgage lenders from January 2007 to December 2009. Dukhman, with the assistance of two attorneys, arranged to purchase properties owned by financial institutions – commonly referred to as real estate owned or REO properties. Corallo recruited other individuals to purchase those same properties at or around the same time, referred to in the Information as the “borrowers.”
Dukhman, Corallo and other unidentified co-conspirators employed a number of fraudulent techniques to further their scheme – including falsifying financial documents, HUD-1 settlement statements and residential loan applications; causing borrowers to apply and obtain loans on properties that they did not own; and failing to record deeds with the county clerk.
Specifically, Dukhman and Corallo caused fraudulent loan applications and HUD-1s to be submitted to mortgage lenders claiming that the purchaser of the REO property was the borrower and not defendant Dukhman; that the borrowers put money down at the closing; that the properties would be the primary residences of the borrowers; that the borrowers had more assets and earned more than they actually did; and that the purchase price was at times twice that actually paid by Dukhman
When the loans were approved, the two attorneys deposited the proceeds of the loans in one of their respective attorney trust accounts. Either of the two attorneys would then act as a closing agent for Dukhman, who would purchase the REO property using the proceeds of the mortgage fraud scheme. After paying the closing costs, the attorneys distributed the proceeds of the mortgage fraud to Dukhman, Corallo and their co-conspirators.
After the attorneys gave Dukhman the deeds to the REO properties, he would have them altered to reflect a sale between the REO bank and the borrower for the purchase price listed in the fraudulent documents submitted to the lenders. Altered deeds were filed in the county clerk’s office – leaving Dukhman out of the title history.
Corallo admitted that he purchased a home in Maplewood, N.J., with proceeds of the fraud. He has agreed to forfeit that property to the government.
The wire fraud conspiracy count carries a maximum potential penalty of 30 years in prison and a $1 million fine. Sentencing is currently scheduled for Jan. 4, 2012.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in charge Michael B. Ward; and the U.S. Secret Service, under the direction of Special Agent in charge Jacob Christine, with the investigation leading to today’s guilty plea.
The government is represented by Assistant U.S. Attorneys Stacey A. Levine of the Health Care and Government Fraud Unit and Peter Gaeta of the Office’s Asset Forfeiture Unit in Newark.
As for Dukhman, the charges and allegations contained in the criminal Complaint are merely accusations, and the defendant is considered innocent unless and until proven guilty.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive 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.
Defense counsel: Anthony Fusco Jr. Esq., Passaic, N.J.