2 NY Lawyers Sued, 1 Disbarred re Their Claimed Roles in Convicted Developer's $92M Mortgage Fraud
A New York title attorney who is awaiting sentencing for his role in a Long Island real estate developer’s $92 million mortgage origination fraud in Nassau County was disbarred last week.
Federal Deposit Insurance Corp. is suing Ted Doumazios along with a closing attorney allegedly involved with him in arranging $1.2 million of the fraudulent loans attributed to convicted developer Thomas Kontogiannis, according to Courthouse News Service and Reuters.
Doumazios pleaded guilty last year in federal court to wire fraud and conspiracy to commit bank fraud. While operating a title company, Clear View Abstract, he allegedly provided Kontogiannis with documentation showing that the real estate developer had clear title on properties when in fact he did not, as Doumazios knew.
Kontogiannis, was sentenced to nine years on the same charges earlier this month. The two men worked with others to perpetrate a scam that involved not only obtaining mortgages fraudulently from Washington Mutual and DLJ Mortgage Capital Inc. but selling those mortgages to secondary buyers at the financial institutions, Reuters reports.
Doumazios, the title company, closing attorney Thomas Cusack III and another corporate defendant are currently facing a related civil suit filed by the FDIC in federal court in Brooklyn. Kontogiannis is not a defendant in that suit.
It alleges that the lenders issued mortgages on properties based on a complete fiction—that straw buyers were the actual purchasers, that the properties had actually been conveyed to them, that funds had been disbursed as reflected on closing documents and that the mortgages were secured by a first-position lien and title insurance.
“In fact,” the suit (PDF posted by Courthouse News) says, “the mortgages purchased by WaMu, while appearing to be genuine and fully documented, were entirely bogus. The borrowers never purchased the properties, even though each loan package contained a signed deed purportedly conveying the property to the borrower. No funds were ever disbursed to the borrowers, even though each loan package contained a signed mortgage, closing statement and other HUD documents, signed by the straw borrower and identifying Cusack as settlement agent and attorney, stating that such disbursements of funds had been made. Titles to the properties were never conveyed or recorded,” the complaint continues, “even though each loan package contained documents indicating that recordation had occurred. No real appraisals were prepared, even though each loan package contained a purported appraisal. No title insurance was ever procured, even though each loan package contained documents stating that such insurance had been or would be paid for and issued (including statements on official forms signed by title agents and title insurers).”
The articles don’t include any comment from the defendants or their lawyers. A phone message left by an ABA Journal reporter this afternoon at a phone number listed for Cusack did not receive an immediate response. A number listed for Doumazios on several online legal directories was not in service.
Doumazios, who earned his law degree from Hofstra University, was admitted in 1993. He did not contest his disbarment, Reuters reports.
A June 2009 press release from the U.S. Attorney’s Office for the Eastern District of New York provides additional details.