MANHATTAN U.S. ATTORNEY RECOVERS $250,000 FROM APPRAISER IN CIVIL MORTRGAGE FRAUD CASE
FOR IMMEDIATE RELEASE
Tuesday March 27, 2012
Appraiser Also Barred from Government Insured Loan Practice for a Decade
Preet Bharara, the United States Attorney for the Southern District of New York, announced today that the United States has settled mortgage fraud claims against real-estate appraiser WILLIAM BUCKLEY and his firm, PREMIER APPRAISAL SERVICES, INC. (“PREMIER”). Under the settlement, BUCKLEY admitted and accepted responsibility for the fact that certain of PREMIER’s appraisals overstated the value of properties that the Government alleges were part of a mortgage fraud scheme. BUCKLEY also agreed to pay $250,000 to the United States, to surrender his real estate license, and to be barred for a decade from performing appraisals in connection with mortgage loans insured by the United States. The settlement, in the form of a consent order, was approved yesterday by U.S. District Judge P. Kevin Castel.
Manhattan U.S. Attorney Preet Bharara said: “The integrity of real estate transactions depends on properties being valued fairly. When William Buckley overstated the value of these properties in his appraisals, it allowed others to commit mortgage fraud, ultimately ripping off the homeowners and the Government, which stood behind the loans to help home buyers. As today’s agreement demonstrates, strong enforcement is imperative, and any professionals who shirk their duties will be held accountable.”
In December 2010, the United States filed a civil fraud lawsuit alleging that 14 defendants – including sellers, lenders, and appraisers – had engaged in a conspiracy to commit mortgage fraud in connection with the “flip” sales of 17 homes in New York City. The Government alleged that the appraiser defendants, including BUCKLEY and PREMIER, inflated the value of residential properties in their appraisal reports, which enabled Mitchell Cohen, a co-defendant, to sell the properties to inexperienced home buyers at inflated prices. According to the Complaint, defendant Cambridge Home Capital, LLC, a mortgage lender, enabled Cohen to orchestrate his fraudulent flip sales by originating loans insured by the U.S. Department of Housing and Urban Development (“HUD”) based on false records and certifications. All 17 mortgage loans defaulted, often within just a few months after closing, exposing HUD to millions of dollars in potential losses.
In February 2012, the Government filed an amended complaint, which specifically alleged that BUCKLEY and PREMIER were paid approximately $2,500 for performing appraisals in connection with the sale of 5 of the 17 properties that were part of the fraudulent scheme. The amended complaint also alleged that BUCKLEY contracted with Cohen in 2010 to make certain perfunctory renovations on residential properties that Cohen wished to sell.
As part of the settlement, BUCKLEY and PREMIER admitted, acknowledged, and accepted responsibility for conduct related to the appraisals of certain residential properties. This conduct included PREMIER issuing appraisals at the behest of Cohen in connection with his flip sale of residential properties, some of which overstated the value of the properties, and BUCKLEY issuing an appraisal for a property sold by Cohen that BUCKLEY also renovated.
BUCKLEY will pay the United States $250,000 to settle the Government’s claims for damages and civil penalties, an amount equal to about one hundred times the amount that BUCKLEY and PREMIER received for issuing the inflated appraisals. The consent order also enjoins BUCKLEY and PREMIER from engaging in any business transaction with Cohen that relates to the purchase, sale, or renovation of any residential real estate.
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To date, the United States has settled with 10 of the 14 defendants named in the civil fraud lawsuit. The defendants that have settled include Cambridge, its owners Seth Kramer and Craig Hyman, loan officer Seth Lapidus, underwriter Jacqueline Derrell, and two other appraisers, James Goldberg d/b/a JJG Real Estate Appraisal Services and Robert Micheline d/b/a P&M Appraisals. These defendants settled the claims against them for a combined total of $1.3 million in damages and penalties and agreed to be barred from all HUD programs permanently or for a term of several years. The United States is continuing to pursue its mortgage fraud claims against Cohen and his affiliated companies.
Mr. Bharara thanked the HUD Office of Inspector General for its assistance with the case.
The case is being handled by Assistant U.S. Attorneys Li Yu and Cristine Irvin Phillips from the Office’s Civil Frauds Unit.
The Civil Frauds Unit works 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.