Attorney convicted in $66M mortgage fraud scheme

Michael P. Tremoglie Jul. 17, 2012, 6:00am

NEW YORK (Legal Newsline) - Attorney Michael Raphan has been found guilty of conspiring to commit bank fraud and wire fraud in connection with a $66 million mortgage fraud scheme.

He is the fifth attorney convicted in this scheme, the U.S. Attorney for the Southern District of New York announced Friday.

Manhattan U.S. Attorney Preet Bharara said: "Michael Raphan was supposed to be a gatekeeper, representing the best interests of his client banks at real estate closings. Instead, he represented his own corrupt interests and those of his co-conspirators, and facilitated a massive mortgage fraud scheme. With his conviction today, Raphan is now the 16th and final defendant to be convicted in a scheme that typified much of what has been wrong in the mortgage industry."

An August indictment charged 14 individuals with a massive mortgage fraud scheme involving First Class Equities, a mortgage brokerage firm with offices located in Oceanside and Old Westbury. Two other individuals pled guilty pursuant to cooperation agreements.

According to the announcement, the plot worked like this: FCE arranged home sales between "strawbuyers" - persons who posed as home buyers, but who had no intention of living in or paying for the mortgaged properties - and homeowners.

The owners were usually in financial distress. FCE loan officers recruited the straw buyers who sometimes paid. They obtained mortgage loans by submitting fraudulent applications to banks and lenders. This went on from 2004-2009, the indictment alleged.

After approving the loans, the lenders sent the mortgage proceeds to Raphan. He allegedly reviewed and approved fake checks brought to closings, lied on settlement statements and generally did whatever was necessary to make FCE president and owner Gerard Canino and co-conspirators huge profits from the fraud.

Raphan was convicted of one count of conspiracy to commit bank fraud and wire fraud and faces a maximum sentence of30 years in prison.

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U.S. Attorney for the Southern District of New York
1 Saint Andrews Plaza
New York, NY 10007

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