NEW YORK (Legal Newsline) -- Three attorneys and a former attorney have pleaded guilty to conspiring to commit wire fraud and bank fraud in connection with a $66 million mortgage fraud scheme, involving over 100 home mortgage loans for residential properties in the New York City area.
The four are attorneys Jacquelyn Todaro, Neal Sultzer and Kevin Hymes and former attorney Michael Schlussel.
"In helping to perpetrate this massive mortgage fraud scheme, these individuals exploited their trusted positions as attorneys," Manhattan U.S. Attorney Preet Bharara said. "And Michael Schlussel went a step further, representing himself as an attorney in good standing, when in fact, he was not.
"With their guilty pleas, they now stand convicted for the roles they played in undermining the integrity of the mortgage industry and the legal profession."
According to the indictment and public statements, First Class Equities a/k/a Thunder Funding a/k/a TAT Mutual Capital was a mortgage brokerage firm with offices located in Oceanside and Old Westbury, N.Y. Fourteen individuals were charged in August 2011 in connection with their roles in a massive mortgage fraud scheme, including the owner and president, loan officers, attorneys and one disbarred lawyer.
FCE arranged home sales between "straw buyers" - people who posed as home buyers, but who had no intention of living in, or paying for, the mortgaged properties - and homeowners who were often people in financial distress and willing to sell their homes. Loan officers at FCE recruited straw buyers - many of whom were paid - and obtained mortgage loans on their behalf by submitting fraudulent applications to banks and lenders that made false representations about the straw buyers' net worth, employment, income, and plans to live in the properties.
After approving the loans, the lenders sent the mortgage proceeds to attorneys who were involved in these transactions. They would appear at real estate closings and distribute the loan proceeds. The attorneys submitted false statements to the lenders about how they were distributing the loan proceeds, and made illicit payments, typically totaling tens of thousands of dollars or more per transaction, from the loan proceeds to themselves and to other members of the conspiracy.
Todaro, 42, of Westbury, pleaded guilty to one count of conspiracy to commit wire fraud and bank fraud, and faces a maximum sentence of 30 years in prison. She also agreed to forfeit $6,554,842.
Sultzer, 61, of Plainview, pleaded guilty to one count of conspiracy to commit wire fraud and bank fraud, and faces a maximum sentence of 30 years in prison. He will forfeit $10,689,500.
Schlussel, 50, of Merrick, pleaded guilty to one count of conspiracy to commit wire fraud and bank fraud, and faces a maximum sentence of 30 years in prison. He forfeits $5,878,442.
Hymes, 39, of Armonk, pleaded guilty to one count of conspiracy to commit wire fraud and bank fraud, and faces a maximum sentence of 30 years in prison. He pays $7,606,500.
Five other defendants charged in the scheme -- Canino, Pandora Bacon, Michael Charles, James Vignola, and Henry Richards -- have also pled guilty and are awaiting sentencing.