David B. Fein, United States Attorney
for the District of Connecticut, today announced that Jeffrey Weisman, 43, of
New Haven, waived his right to indictment and pleaded guilty yesterday before
United States District Judge Janet C. Hall in Bridgeport to one count of
conspiracy to commit mail fraud, wire fraud, and bank fraud. The charge stems
from Weisman’s role as a closing attorney in a multi-million-dollar mortgage
fraud scheme in New Haven.
According to court documents and
statements made in court, between approximately 2006 and 2008, Weisman, who had
offices in Waterbury, along with Ronald E. Hutchison, Menachem Levitin, and
others conspired to defraud mortgage lenders and financial institutions by
obtaining millions of dollars in fraudulent mortgages for the purchase of
dozens of multi-family properties in New Haven. As part of the scheme, sellers
of the properties agreed to accept sale prices that were significantly lower
than the contract prices. The lower prices were not disclosed to lenders from
which the buyers obtained financing to purchase the properties, and scheme
participants submitted to mortgage lenders false HUD-1 forms that often did not
match another, undisclosed HUD-1 form that was actually used to disburse the
fraudulently obtained proceeds at the closing. As a result of the submission of
the false HUD-1 forms and other false documentation in support of the loans,
including falsified monthly rental income and fictitious leases, the mortgage
lenders would issue mortgages based on the inflated sales price.
Scheme participants used the
fraudulently obtained mortgage proceeds to pay themselves and others.
In most of the fraudulent transactions,
the buyers did not make any deposits or down payments for the properties they
purchased. Rather, the co-conspirators used some of the fraudulently obtained
mortgage proceeds to cover the down payments and deposits. In addition, at or
shortly after a closing, a borrower would often receive several thousand
dollars, although this payment was not disclosed to the lender.
Weisman acted as a closing attorney in
approximately 35 fraudulent transactions in connection with 26 properties. In
connection with many of these closings, Weisman prepared false HUD-1 forms that
were submitted to lenders. In some of these transactions, while the HUD-1 form
that Weisman sent to the lender indicated that the borrower brought funds to
the closing, Weisman actually distributed funds to the borrower at the closing.
In total, more than $10 million in
fraudulent mortgages on more than 40 properties were obtained during the
conspiracy. Many of the houses purchased during the scheme went into default
and have been foreclosed upon, causing losses of more than $7 million to
lenders.
Judge Hall has scheduled sentencing for
October 2, 2012, at which time Weisman faces a maximum term of imprisonment of
30 years and a maximum fine of approximately $20 million. As part of his plea
agreement, Weisman agreed to pay at least $4 million in restitution.
This case is being investigated by the
Federal Bureau of Investigation, the United States Postal Inspection Service,
the U.S. Department of Housing and Urban Development-Office of Inspector
General, and the Federal Housing Finance Agency-Office of Inspector General.
The criminal case is being prosecuted by Assistant United States Attorney David
T. Huang, and the parallel civil forfeiture cases are being handled by
Assistant United States Attorney Julie G. Turbert.
In July 2009, the U.S. Attorney’s Office
and the Federal Bureau of Investigation announced the formation of the
Connecticut Mortgage Fraud Task Force to investigate and prosecute mortgage
fraud cases and related financial crimes occurring in Connecticut. Citizens are
encouraged to report any suspected mortgage fraud activity by calling
203-333-3512 and requesting the Connecticut Mortgage Fraud Task Force or by
sending an e-mail to ctmortgagefraud@ic.fbi.gov.
The Connecticut Mortgage Fraud Task
Force includes representatives from the U.S. Attorney’s Office; Federal Bureau
of Investigation; Internal Revenue Service-Criminal Investigation; U.S. Postal
Inspection Service; U.S. Department of Housing and Urban Development-Office of
Inspector General; Federal Deposit Insurance Corporation, Office of Inspector
General; and State of Connecticut Department of Banking.
This case was brought in coordination
with the President’s Financial Fraud Enforcement Task Force, which was
established to wage an aggressive and coordinated effort to investigate and
prosecute financial crimes. The task force includes representatives from a
broad range of federal agencies, regulatory authorities, inspectors general,
and state and local law enforcement who, working together, bring to bear a
powerful array of criminal and civil enforcement resources. The task force is
working to improve efforts across the federal executive branch, and with state
and local partners, to investigate and prosecute significant financial crimes,
ensure just and effective punishment for those who perpetrate financial crimes,
combat discrimination in the lending and financial markets, and recover
proceeds for victims of financial crimes.
To report financial fraud crimes and to
learn more about the President’s Financial Fraud Enforcement Task Force, please
visit www.stopfraud.gov.
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