News and Press Releases

Loan officer associated with home start america sentenced to prison for role in $1.5 million fraud conspiracy



FOR IMMEDIATE RELEASE
October 17, 2011


 

NEWARK, N.J. – Loan officer David Wynn – who was involved in a large scale wire fraud conspiracy through purported real estate investment firm Home Start America, Inc. (“HSA”) with its CEO and founder Michael Kaufman – was sentenced today to a year and a day in prison for his role in the $1.5 million conspiracy, U.S. Attorney Paul J. Fishman announced.

Wynn, 45, of Englewood, N.J., previously pleaded guilty to a Superseding Indictment charging both men with conspiracy to commit wire fraud. Kaufman, 42, of Reading, Pa., previously pleaded guilty to the same charge and awaits sentencing. Both defendants entered their guilty pleas before U.S. District Judge Dennis M. Cavanaugh, who also imposed the sentence today in Newark federal court.

According to documents filed in this case and statements made in court:

Kaufman founded HSA in Bloomfield, N.J., and at one time employed more than 30 people. Kaufman, through HSA, purchased and sold residential real estate properties. As part of the scheme, Kaufman and others recruited people – often first-time home buyers – to purchase properties quickly, with promises of no money down, no closing costs, and repairs paid for by HSA. Kaufman would then steer the purchasers to loan officers, including Wynn.

Many of the properties sold by HSA had actually been bought by HSA shortly before, and then “flipped” to the unsuspecting buyers for far more than HSA paid. Kaufman, Wynn, and others falsely inflated the buyers’ income and assets on loan documents to make it appear that the buyers could afford the properties HSA was selling, when the purchasers did not have the means to buy the properties.

Victim financial institutions – relying on the false figures in the loan documents – then issued the mortgage loans, unaware of the purchasers’ true financial conditions. HSA and Kaufman received illicit profits when the transactions closed, and Wynn and other loan officers received commissions for their fraudulent work. After the closings, the buyers could not make the payments on the properties, and nearly always lost the properties to foreclosure.

The fraud, which began as early as 2002 and lasted through June 2005, caused over $1.5 million in loss to the banks, and earned hundreds of thousands of dollars in profits for Kaufman and HSA.

In addition to the prison term, Judge Cavanaugh sentenced Wynn to three years of supervised release and ordered him to pay $171,000 in restitution.

U.S. Attorney Fishman praised the Department of Housing and Urban Development’s Office of Inspector General, under the direction of Joseph W. Clarke, Special Agent in Charge for the Mid-Atlantic Region; and the FBI, under the direction of Special Agent in Charge Michael B. Ward, for the investigation of this case.

The government is represented by Assistant U.S. Attorneys Bohdan Vitvitsky and Zach Intrater of the U.S. Attorney’s Office Criminal Division in Newark.

11–414                                                                                         

Defense counsel: Stephen N. Dratch,Esq., Livingston, N.J.

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