Lawyer gets up to four years in prison in alleged short-sale scheme
A New York lawyer has been sentenced to up to four years in prison in an alleged $2.3 million short-sale mortgage fraud scheme.
Helene Stetch, 53, of Lindenhurst, was sentenced Wednesday to a prison term of 16 months to four years, according to a press release and Newsday. She was accused of selling homes to new owners without paying off existing mortgages and without approval from all lien holders.
Homeowners who believed they were selling their homes through short sales that paid off their mortgages later learned something was amiss when they received foreclosure notices.
“In fact,” the press release says, “the underlying mortgages were not being paid off, the HUD settlement statements falsely indicated that there were no underlying mortgages to be paid off, and no title insurance was purchased.” Stetch continued short sale negotiations after the closings as if no sale had occurred.
She pleaded guilty Jan. 9 to one count of criminal possession of stolen property and six counts of second-degree grand larceny.
Stetch had worked at the law office of Kenneth Schwartz at Carle Place in New York, which served as the lender’s settlement agent in the transaction. Money from the property sales was wired to an attorney trust account in Schwartz’s name.
Stetch wrote the majority of disbursement checks and Schwartz, 67, signed checks to himself and a few other checks, the press release said. Prior coverage said the checks were for attorney fees.
Schwartz entered a conditional plea Jan. 13 to criminal facilitation in the fourth degree, a misdemeanor, and disorderly conduct, a violation. The misdemeanor charge will be dropped after completion of the agreement terms.
Stetch executed eight confessions of judgment totaling about $2.3 million, while Schwartz executed confessions of judgment in favor of two homeowners totaling about $129,000, the press release says. Schwartz will also pay about $12,000 in restitution to a third homeowner.
Schwartz has said he wasn’t aware of the scheme when it was ongoing, and he reported Stetch to police when he discovered the issue.
Stetch’s lawyer, Barry Zone, told Newsday that she didn’t benefit from the crime and was only an associate in the firm who facilitated the transactions.
“She’s accepted responsibility for her part,” said Zone. “Of course, she took the brunt of the hit because she was the responsible attorney, but, make no mistake, this was not her doing alone.”
