NJ mortgage broker admits fraud, U.S. Attorney announces
NEWARK, N.J. (Legal Newsline) - A former mortgage broker admitted that he participated in a scheme which defrauded lenders and generated millions of dollars in fraudulent mortgage loans, the U.S. Attorney for the District of New Jersey announced last week.
The case was made in conjunction with President Barack Obama's Financial Fraud Enforcement Task Force.
Frank Corallo, 38, of Maywood, N.J., pleaded guilty to one count of conspiracy to commit wire fraud. Corallo and Eddie Dukhman, 35, of Sewaren, N.J., were arrested Oct. 21, 2010, and charged with conspiring to defraud mortgage lenders of more than $7 million in more than 50 New Jersey residential real estate purchases.
Another co-conspirator and former mortgage broker, Ara Mesropian, 39, of Paramus, N.J., pleaded guilty on July 28, to participating in the same conspiracy. He is awaiting sentencing.
According to the announcement Corallo admitted that he and Dukhman, who was supposedly in the real estate business, conspired to defraud mortgage lenders from January 2007 to December 2009. Dukhman, with the assistance of two attorneys, arranged to purchase properties owned by financial institutions - commonly referred to as real estate owned or REO properties. Corallo recruited other individuals to purchase those same properties at or around the same time.
Dukhman, Corallo and other unidentified co-conspirators falsified financial documents, HUD-1 settlement statements and residential loan applications. They also caused borrowers to apply and obtain loans on properties that they did not own; and failed to record deeds with the county clerk.
Specifically, Dukhman and Corallo submitted fraudulent loan applications and HUD-1s to mortgage lenders claiming that the purchaser of the REO property was the borrower and not defendant Dukhman. When the loans were approved, the two attorneys deposited the proceeds of the loans in one of their respective attorney trust accounts.
According to the announcement, either of the two attorneys would then act as a closing agent for Dukhman, who would purchase the REO property using the proceeds of the mortgage fraud scheme. After paying the closing costs, the attorneys distributed the proceeds of the mortgage fraud to Dukhman, Corallo and their co-conspirators.
Dukhman would have the deeds to the REO properties altered to reflect a sale between the REO bank and the borrower for the purchase price listed in the fraudulent documents submitted to the lenders. The altered deeds were filed in the county clerk's office -omitting Dukhman from the title history.
Corallo admitted purchasing a home with the proceeds from the fraud. He has agreed to forfeit that property to the government.
Dukhman is still considered innocent unless and until proven guilty.