Former Attorney Indicted For Lying To Federal Investigators About His Role In A Million-Dollar Fraud Scheme
At Least Ten Families Fell Victim To The Scheme, Causing Some To Lose Their Homes
Earlier today, an indictment was unsealed charging disbarred New York attorney Barry Stephen Zornberg with lying to federal investigators about his role in a foreclosure rescue fraud scheme.1 The scheme ensnared at least ten families, defrauding them of approximately $1.3 million in home equity and causing some of them to lose their homes. If convicted, Zornberg faces up to five years’ of imprisonment.
The charges, arrests and seizures were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI); and Philip R. Bartlett, Inspector-in-Charge of the New York Office of the United States Postal Inspection Service (USPIS).
“As set forth in the indictment, the defendant, a disbarred attorney, lied to federal investigators about the role that he played in this fraud scheme, which took advantage of people who were looking to save their homes from foreclosure. A law license is not a license to steal or lie,” stated United States Attorney Lynch. “We are committed to protecting our communities from the abuses of fraud.”
FBI Assistant Director-in-Charge Venizelos stated, “All too often, desperate homeowners fall prey to dishonest foreclosure specialists, many of whom use their experience in mortgage-related industries to carry out their fraudulent schemes. Just as legitimate programs exist to assist distressed homeowners facing this dilemma, so too do con artists who make it their goal to capitalize on the misfortune of others. As alleged, the defendant knowingly exploited vulnerabilities in the foreclosure process, caused serious damage to a number of families, and lied to investigators about his role in the scheme. The FBI continues to support partnerships within the mortgage industry and law enforcement as we work together to combat this serious crime.”
USPIS Inspector-in-Charge Bartlett stated, “The defendant used the dream of home ownership and a fragile economy to lie and steal from trusting individuals. Postal Inspectors and their law enforcement partners used their investigative power and the justice system to ensure he is held accountable for his involvement in this illegal scheme.”
As alleged, the foreclosure rescue fraud was carried out from Empire Property Solutions, LLC ("Empire") in Bethpage, New York. Zornberg and two principals of Empire encouraged distressed homeowners to “refinance” their residences with Empire, when, in reality, the victims were tricked into transferring title to their homes to straw buyers and paying large fees to Empire. As part of this scheme, the victims lost title to their homes, valued in the aggregate at $4.3 million. Zornberg and his partners in the scheme extracted more than $1.3 million in equity from the victim families’ homes, leaving the victim families significantly worse off than when they asked for help. The straw buyers made no payments on the homes, causing the victims’ homes to go into default. Almost all of the victim homeowners face foreclosure due to the scheme and a number have been dispossessed.
As detailed in the indictment, when interviewed by federal investigators, Zornberg, the alleged architect of the scheme, falsely stated that he advised the victims to not continue with the scheme. In fact, he advised the opposite, thereby generating large fees for himself.
The defendant is scheduled to be arraigned on Wednesday, February 12, 2014, at 3:00 p.m., before United States Magistrate Judge A. Kathleen Tomlinson, at the federal courthouse in Central Islip, New York.
The government’s case is being prosecuted by Assistant United States Attorney Christopher A. Ott.
BARRY STEPHEN ZORNBERG
Hauppauge, New York
1 The charge in the indictment is merely an allegation, and the defendant is presumed innocent unless and until proven guilty.