14 Charged In Seven Separate Mortgage Fraud Schemes
Charges mark third anniversary of the creation of the Western Pennsylvania Mortgage Fraud Task Force
PITTSBURGH, Pa. ‑ United States Attorney David J. Hickton and key officials from federal, state and local law enforcement and regulatory agencies recognized today the three‑ year anniversary of the Feb. 4, 2008, formation of the Western Pennsylvania Mortgage Fraud Task Force, and the filing of charges against 14 individuals associated with seven different mortgage fraud schemes. The individuals charged include a wide spectrum of roles associated with mortgage fraud, including a closing attorney, mortgage brokers, real estate investors, and a bank employee. The seven schemes involved approximately 320 properties and $75 million in fraudulent loans.
The Western Pennsylvania Mortgage Fraud Task Force is a strategic partnership intended to combat the mortgage fraud problem in the Greater Pittsburgh region. The Mortgage Fraud Task Force brings together representatives from the U.S. Attorney's Office, U.S. Secret Service, Federal Bureau of Investigation, Internal Revenue Service ‑ Criminal Investigation, U.S. Postal Inspection Service, U.S. Department of Housing and Urban Development ‑ Office of Inspector General, Office of the United States Trustee, Pennsylvania Attorney General's Office, Pennsylvania Department of Banking, Pennsylvania Department of State, Bureau of Enforcement and Investigation and the Allegheny County Sheriff's Office to investigate and prosecute mortgage fraud offenders.
On Feb. 1, 2011, the United States Attorney filed separate, but related, Informations charging Gilbert Fischer, 40, of Elizabeth, Pa., and Jason Dull, 41, of McKeesport, Pa., with wire fraud. Fisher and Dull operated Lender's Corner, which was a mortgage brokerage firm that specialized in obtaining financing for individuals that was collateralized by real estate.
In separate, but related, cases, two loan officers for Lender's Corner previously pleaded guilty to wire fraud conspiracy charges and are awaiting sentencing. Those individuals are Dean Ackinclose, 42, of Clairton, Pa., and Jason Lewis, 38, of Buena Vista, Pa. According to the information presented to the Court, Fisher, Dull, Lewis and Ackinclose, on behalf of Lender's Corner, presented false information to lenders, including loan applications that overstated the borrowers' incomes and assets, and their employment status. In addition, false documents were submitted to the lenders that supported the misrepresentations in the loan applications, including fake pay stubs and bank records.
EASY REALTY SOLUTIONS AND S&P MORTGAGE
On Feb. 1, 2011, a federal grand jury in Pittsburgh returned a six‑ count Superseding Indictment charging James C. Platts, 59, of Wexford, Pa.; Deean Haggerty, 36, of New Castle, Pa.; and Bernard J. Flugher, 62, of Cranberry Township, Pa., with mail fraud, mail fraud conspiracy, and money laundering in connection with a mortgage fraud scheme.
According to the information presented to the Court, Platts was the President and Treasurer of Easy Realty Solutions; Haggerty was employed with S&P Mortgage; and Flugher was an attorney who conducted real estate closings with an office located in Cranberry Township, Pa. The fraud involved the submission of fraudulent documents falsely verifying that borrowers paid rent and falsely verifying borrowers' bank account balances. The scheme also involved fraudulent loan applications that overstated the income and assets of borrowers, and the deposit of funds into borrowers' accounts to make it falsely appear as though they had the assets to make the down payment required at closing. The real estate closing involved fraudulent settlement statements that falsely reported that the borrowers had made substantial down payments associated with the purchase of the properties. The settlement statements also included payments to Platts for fraudulent liens that had been filed against the properties serving as collateral for the loans.
In connection with one of the transactions involving a property located on Shadeland Avenue, Pittsburgh, Pa., the Indictment alleges that Flugher purchased a bank check in an amount equal to the amount that the borrowers were supposed to bring to the closing from the borrowers' own fund and then deposited that check back into his account. Flugher, however, provided a copy of that check to the lender as if the check had been presented to him by the borrowers at the closing as their down payment. Flugher also prepared and submitted to the lender a fraudulent settlement statement that falsely reported that the borrowers had made a substantial down payment when, in fact, they had not.
ABSOLUTE SETTLEMENT SERVICES AND MCM CONSULTING AND MANAGEMENT
On Jan. 18, 2011, a federal grand jury returned a 17‑ count indictment charging Harry Anthony, 39, of Washington, Pa., with wire fraud. According to information presented to the Court, Anthony was associated and helped to operate the following three entities: (1) Absolute Settlement Services, which was an entity that specialized in closing real estate transactions; (2) MCM Consulting and Management, which was a company that assisted borrowers to obtain loans collateralized by real estate; and (3) Bleaker Street Construction, which was a company that purportedly remodeled properties.
The Indictment alleges that from in or around February 2005, and continuing until in or around September 2007, Anthony devised and executed a mortgage fraud scheme that involved the submission of fraudulent loan applications that overstated the income of the borrowers; payments to Bleaker Street Construction that were falsely represented to the lenders as payment for construction costs or maintenance and repair expenses; forged documents; forged checks payable to a borrower that were deposited into a bank account controlled by Anthony; and the submission of fraudulent invoices that falsely represented that renovation work had been done on properties serving as collateral for the loans.
The Indictment lists approximately $5.8 million worth of fraudulent loans secured through the fraudulent means described above.
ALICO MORTGAGE AND US FUNDING PARTNERS
On Feb. 1, 2011, the United States Attorney filed a one‑ count Information charging Dean Rodriquez, 41, of Wexford, Pa., with one count of wire fraud conspiracy. The Information alleges that Rodriguez was a mortgage broker who assisted borrowers in obtaining financing collateralized by real estate through Alico Mortgage and US Funding Partners. Between August 2004 and May 2006, Rodriguez participated in a conspiracy in which he submitted loan applications to lenders that contained material misrepresentations, including that the borrowers intended to reside at the properties serving as collateral for the loans as their primary residence, and that overstated the borrowers' incomes and assets. The settlement statements associated with the loan closings were also fraudulent in that they falsely represented that the borrowers had made down payments associated with the closings, when, in fact, they had not.
PITTSBURGH HOME LOANS AND RIVERSIDE MORTGAGE
On Jan.18, 2011, the grand jury returned four separate, but related, indictments charging five individuals. Those individuals are:
George Kubini, 46, of Verona, Pa.;
Bartholomew Matto, 31, of Pittsburgh, Pa.;
Dov Ratchkauskas, 44, of Pittsburgh, Pa.;
Rhonda Roscoe, 41, of Pittsburgh, Pa.; and
Rochele Roscoe, 50, of Pittsburgh, Pa.
A number of other individuals have also pleaded guilty to their roles in this scheme and are awaiting sentencing. Those individuals are:
Robert Arakelian, 49, of Pa.;
Karen Atkison, 51, of West Sunbury, Pa.;
Eric Hall, 30, currently of Henderson, Nev., and formerly of Monroeville, Pa.; and
Daniel Sporrer, 47, of Pittsburgh, Pa.
Two other individuals were also charged in connection with this scheme. Crystal Spreng, 40, of Cabot, Pa., pleaded guilty to a wire fraud conspiracy charge and was sentenced to three years of probation. Jason Moreno, 27, of Pittsburgh, Pa., was also charged with wire fraud conspiracy, and the charges against him remain pending.
The Information presented to the Court demonstrated that the individuals listed below were involved in a complex mortgage fraud scheme involving approximately100 properties and millions of dollars of loans.
Robert Arakelian was a mortgage broker who worked for Pittsburgh Home Loans, and Rhonda and Rochelle Roscoe were also mortgage brokers who operated Riverside Mortgage. Kubini and Ratchkauskas were real estate investors who typically purchased properties after a foreclosure. They sold the properties through the scheme. Matto was an employee of a bank who provided documents falsely verifying borrowers' bank account balances.
The scheme had multiple facets, but it typically involved a purchase of a property from Kubini and Ratchkauskas financed through fraudulent submissions to the lenders. The typical fraud deal involved selling the property at an overstated price to a buyer who could not legitimately qualify for a loan. The typical fraudulent deal included the following;
- fraudulent loan applications submitted by Arakelian, Hall, and the Roscoes that overstated the income and assets of the borrowers;
- fraudulent appraisals provided by Moreno that overstated the value of the collateral;
- fraudulent verification of deposits provided by Spreng and Matto that falsely verified that the borrowers had sufficient funds in their bank accounts to make substantial down payments associated with the purchases; and
- fraudulent closing documents prepared by Atkison, Sporrer, and another individual falsely representing that the borrowers had made substantial down payments associated with the purchases.
On Feb. 1, 2011, a federal grand jury returned a one‑ count Indictment charging Richard Underhill, 48, of Pittsburgh, Pa., with one count of bank fraud. The Indictment alleges that Underhill participated in a scheme to defraud 1st Mariner Bank in which he, in connection with a loan application for a loan to be collateralized by a property located on Mayview Road, Pittsburgh, Pa., represented that he intended to use the proceeds of the loan to refinance his real estate business when, in fact, he intended to use the proceeds to settle a lawsuit against him in connection with a different fraud scheme. The loan application also contained fraudulent information related to his monthly base employment income and his assets. He also understated his liabilities, including liabilities incurred in the other fraud scheme.
Underhill was convicted of a different mortgage fraud scheme in 2009.
BEAVER FINANCIAL SERVICES
On Feb. 1, 2011, a federal grand jury returned a one‑ count Indictment charging Michael Staaf, 41, of New Brighton, Pa., with one count of wire fraud conspiracy. The following other individuals have already pleaded guilty to their roles in this conspiracy and are awaiting sentencing:
William Buchko, 60, of New Brighton, Pa.;
Ralph Esposito, 46, of Beaver, Pa.;
James Ross, 41, of Oakdale, Pa.; and
Chadd Stubbs, 34, of Pittsburgh, Pa
According to information presented to the Court, Staaf operated a mortgage broker company called Beaver Financial Services. He orchestrated a mortgage fraud scheme in which he sold mostly commercial properties owned by an entity that he controlled or by a person associated with the conspiracy, to another entity that he controlled or to an individual associated with the conspiracy, at elevated prices. To secure financing to purchase these properties, Staaf submitted loan applications to lenders on behalf of borrowers that contained misrepresentations related to the borrowers' financial condition, including their income and assets. He also submitted false documents to the lenders including the following:
- appraisals that inflated the true value of the properties;
- rent rolls that overstated the rental income earned at the properties;
- invoices falsely representing that improvements had been made on the properties;
- fictitious leases;
- fictitious bank statements and other documents used to verify the borrowers' assets;
- fictitious W‑ 2 forms and other documents used to verify the borrowers' incomes;
- back‑ dated deeds; and
- personal financial statements that overstated the borrowers' income and net worth.
The closings were also fraudulent because the closing document falsely represented that the borrowers had made down payments in connection with the closings and that the first mortgage associated with the properties had been or would be satisfied, when those liabilities had not been satisfied and were not satisfied as part of the transaction.
Buchko was the attorney who closed some of the transactions through an entity called U.S. Settlement Services and Stubbs was a loan officer who worked for Beaver Financial. Esposito and Ross were all individuals who purchased or sold properties through the scheme either individually in their own names or through corporations that they owned but that were controlled by Staaf.
Assistant U.S. Attorneys Brendan T. Conway and Shaun E. Sweeney are prosecuting these cases on behalf of the government.
Indictments and Informations are accusations. A defendant is presumed innocent unless and until proven guilty.
The mortgage fraud hotline number for industry members to call to report potential fraud is 412‑ 894‑ 7550. Once potential abuses have been reported, the task force works with other appropriate law enforcement and prosecutorial entities to evaluate and investigate the claims. Consumers may report suspected fraud by calling the Pennsylvania Attorney General's Consumer Protection Hotline at 1‑ 800‑ 441‑ 2555 or by downloading a complaint form from www.attorneygeneral.gov.
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