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Justice News

Department of Justice
U.S. Attorney’s Office
District of New Jersey

Thursday, September 12, 2013

Property Manager And Straw Purchaser Admit Roles In Multimillion-Dollar Mortgage Fraud

CAMDEN, N.J. – A property manager and a straw purchaser have admitted their roles in a scheme to defraud financial institutions as part of a multimillion-dollar mortgage fraud that used phony documents and “straw buyers” to make illegal profits on over-developed condominiums in the Wildwood, N.J., area, U.S. Attorney Paul J. Fishman announced today.

Paul Watterson, 53, of Mountainside, N.J., and John Bingaman, 44, of Benton, Ark., pleaded guilty before U.S. District Judge Jerome B. Simandle in Camden federal court to separate informations charging each with one count of conspiracy to commit wire fraud and one count of conspiracy to commit money laundering. Bingaman entered his plea today and Watterson entered his plea on Sept. 11, 2013.

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

Watterson and his conspirators identified homes in Wildwood and Wildwood Crest and recruited straw buyers to purchase those properties at the inflated rates. The straw buyers had good credit scores, but lacked the financial resources to qualify for mortgage loans. Watterson created fraudulent loan applications that contained false information about the straw buyers’ employment, income, assets and intended use of the properties. Watterson also obtained on behalf of his conspirators false documents to support the phony loan applications for certain straw purchasers.  Watterson’s actions were designed to make the straw buyers appear more creditworthy than they actually were in order to induce the lenders to make the loans.

Watterson and his conspirators caused fraudulent mortgage loan applications in the name of the straw buyers, including the supporting documents, to be submitted to mortgage brokers that the brokers knew were false. Once the loans were approved and the mortgage lenders sent the loan proceeds in connection with real estate closings, Watterson’s conspirators took a portion of the proceeds, having funds wired or checks deposited into various accounts they controlled. They also distributed a portion of the proceeds to other members of the conspiracy for their respective roles.  Watterson received $273,600 from five separate real estate transactions.

Bingaman purchased three separate properties in Wildwood and Wildwood Crest.  Bingaman and others falsified his loan applications with respect to his employment, income, and assets in order to cause the lenders to make loans to Bingaman for the three properties. Bingaman took a portion of the fraudulent mortgage proceeds by having three separate checks totaling $241,789.98 deposited into an account for Five Stone Development – a company he controlled.

The wire fraud conspiracy charge is punishable by a maximum potential penalty of 30 years in prison and a $1 million fine. The money laundering conspiracy is punishable by a maximum potential penalty of 10 years in prison and a $250,000 fine. Watterson’s sentencing is scheduled for March 13, 2014. Bingaman’s sentencing is scheduled for March 14, 2014.  

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford; and IRS–Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen, for the investigation leading to today’s guilty pleas.

The government is represented by Assistant U.S. Attorney Jacqueline M. Carle of the U.S. Attorney’s Office Criminal Division in Camden.


Defense counsel:
Watterson: Thomas R. Ashley Esq., Newark
Bingaman: William H. Buckman Esq., Moorestown, N.J.

Bingaman Information

Updated August 20, 2015