LEADER OF $66 MILLLION MORTGAGE FRAUD SCHEME PLEADS GUILTY IN MANHATTAN FEDERAL COURT
Preet Bharara, the United States Attorney for the Southern District of New York, announced that GERARD CANINO, the president and owner of Long Island-based mortgage brokerage firm First Class Equities, pled guilty today to conspiring to commit wire fraud and bank fraud in connection with a $66 million mortgage fraud scheme. CANINO pled guilty this afternoon before U.S. District Judge Robert P. Patterson.
Manhattan U.S. Attorney Preet Bharara said: “As the president and owner of First Class Equities, Gerard Canino should have promoted responsible homeownership and protected the integrity of the mortgage finance industry. Instead, he used his firm to commit a massive mortgage fraud scheme that left scores of foreclosed properties in its wake. With today’s plea, Canino now stands convicted for his role in this brazen scheme.”
According to the Indictment previously filed in Manhattan federal court, as well as statements made in public proceedings:
CANINO was the president and owner of First Class Equities, a mortgage brokerage firm with offices located in Oceanside and Old Westbury, New York.
From 2004 to 2009, CANINO and his firm engaged in a massive mortgage fraud scheme that recruited “straw buyers” – individuals who posed as home buyers but had no intention of living in, or paying for, the mortgaged properties – to purchase homes from willing sellers, many of whom were in financial distress. CANINO and his co-conspirators often paid the straw buyers for their participation in the scheme. At CANINO’s direction, loan officers at First Class Equities submitted applications to banks and lenders on behalf of the straw buyers that made fraudulent representations about their net worth, employment, and income. They also fraudulently stated that the sham buyers planned to live in the properties for which the mortgage applications were made. After approving the loans, the lenders sent the mortgage proceeds to their attorneys, including several that were participants in the scheme. These attorneys submitted false statements to the lenders about how they were distributing the loan proceeds and then made huge illicit payments, typically totalling tens of thousands of dollars or more per transaction, from the loan proceeds to members of the conspiracy.
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CANINO, 51, of Merrick, New York, pled guilty to one count of conspiracy to commit wire fraud and bank fraud and faces a maximum sentence of 30 years in prison. CANINO will be sentenced by Judge Patterson on September 17, 2012, at 4:00 p.m.
Mr. Bharara praised the FBI for its outstanding work in the investigation.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Mr. Bharara serves as a Co-Chair of the Securities and Commodities Fraud Working Group. 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.
Charges are still pending against CANINO’s co-defendants, and they are presumed innocent unless and until proven guilty. Trial of the remaining defendants is scheduled to begin on July 2, 2012.
This matter is being handled by the Office’s Complex Frauds Unit. Assistant U.S. Attorneys Nicole Friedlander and Niketh Velamoor are in charge of the criminal case.12-102