YOU READ IT HERE FIRST: A Lyndhurst man conducted bogus real estate closings even though he wasn’t an attorney or title agent, as part of what the government said was a long-running, large-scale mortgage-fraud scheme of short sales and flips by a group of associates who caused roughly $10 million in losses, U.S. Attorney Paul J. Fishman announced this morning.
Among those charged with conspiracy to commit bank fraud is 32-year-old Kenneth Sweetman, an Essex County native who the government said also keeps a residence in Nutley. He was due for a first appearance in federal court in Newark this afternoon.
Running a now-defunct company called Prominent Abstract, Sweetman was part of a network that, for four years, pulled off a series of mortgage frauds using at least 15 properties in and around Newark and Elizabeth, according to an FBI complaint on file in U.S. District Court in Newark.
The frauds “took several forms, including obtaining control of properties through fraudulent ‘short sale’ transactions, short sale flips, and identity theft,” Fishman said.
The associates “submitted materially false mortgage loan documents to lenders in order to obtain loan proceeds,” which they then pocketed, along with payments through various buyers, he added.
Among those charged are North Jersey mortgage-company loan officers who the government said participated in the scheme.
Sweetman is charged with submitting false mortgage loan applications to mortgage lenders for a property on Smith Street in Elizabeth – in which he and others accused in the scheme told lenders the borrower would cover the down payment thanks to a gift from a friend or relative.
That money actually came from “a real estate investor who, along with his girlfriend, provided much of the funds used by the defendants to perpetuate their fraudulent schemes,” Fishman said.
Together, the defendants formed limited liability companies (LLCs) in the names of those similar to legitimate licensed title companies in order to open bank accounts and conceal the scam, the federal complaint alleges.
This allowed them to divvy up the proceeds without reporting them, as required, on federal housing funding statements, it says.
Fishman credited agents with the Newark FBI’s Mortgage Fraud Task Force for the investigation leading to today’s charges.
He also cited the assistance of:
- the U.S. Postal Inspection Service;
- the U.S. Housing and Urban Development (HUD) Northest Office of Inspector General;
- the Federal Housing Finance Agency (FHFA) Office of Inspector General;
- the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP);
- the IRS;
- the Hudson County Prosecutor’s Office.
Prosecuting the case are Assistant U.S. Attorneys Lakshmi Srinivasan Herman, Aaron Mendelsohn, and Charlton Rugg of the U.S. Attorney’s Office Economic Crimes Unit in Newark.
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