2 lawyers among 6 charged in $30M mortgage fraud conspiracy
Posted May 6, 2014 1:50 PM CDT
By Martha Neil
Two lawyers are among six defendants federally charged in what authorities say was a $30 million mortgage fraud carried out in the New York City area between 2003 and 2008.
All face a single count of conspiracy to commit mortgage fraud, Newsday reports. The charge carries a maximum prison term of 30 years, upon conviction.
The scheme worked by artificially inflating the prices of 19 homes on Long Island by up to 80 percent, the feds say. After agreeing to purchasing homes from innocent sellers at market prices, participants allegedly obtained loans based on inflated values and false claims concerning their own debts and assets. At closing, they allegedly shared the difference between the mortgaged amount and the actual purchase or sale price. Then, the feds say, they resold the mortgages, through an insider's mortgage company, on the secondary market to banks and other investors at the inflated price, according to the Long Island Press and a press release from the U.S. Attorney for the Eastern District of New York.
Lenders lost millions when the Nassau County and Suffolk County homes went into foreclosure.
The accused ringleader, Aaron Wider, 50, is the owner of a Garden City mortgage company that obtained funding for transactions from other mortgage lenders. Attorney John Petiton, 68, of Garden City, is accused of orchestrating home resales at inflated prices. Attorney John Finger, 48, who practices in Mineola, is accused of concealing from lenders at closing the true price and distributing the difference between the mortgage amount and the purchase amount to insiders.
A real estate appraiser is also among the defendants. All are expected to appear in federal court in Central Islip on Tuesday and Wednesday, but the news articles don't include any comment from them or their legal counsel.
“The conduct charged in the indictment is a prime example of the type of corrupt mortgage-lending practices that preceded the bursting of the real estate bubble, the loss of faith in securitized mortgage obligations, and the financial collapse of 2007 and 2008,” said U.S. Attorney Loretta Lynch in the release. “Instead of using their skills in banking, the law, and investing to assist individuals pursuing the American Dream, the defendants cooked up a sophisticated scheme that defrauded lenders and then fed toxic debt to the investigating public at large in the secondary mortgage market."