Wednesday, February 28, 2024
HomenewsDeveloper and Attorney in New Jersey Admit to Arranging a Massive Mortgage...

Developer and Attorney in New Jersey Admit to Arranging a Massive Mortgage Fraud Scheme!

US Attorney Philip R. Sellinger reported on Wednesday that a Somerset County real estate developer and a Morris County attorney were each guilty of conspiring to execute a mortgage fraud scheme that resulted in over $3.5 million in losses.

Victor Santos, aka Vitor Santos, 63, of Watchung Borough, and Fausto Simoes, 69, of Millington, pled guilty to conspiracy to commit bank fraud via videoconference before U.S. District Judge Michael A. Shipp in Trenton federal court, according to Sellinger.

According to court documents and testimony, between September 2007 and November 2008, Santos, a real estate developer, and Simoes, a lawyer, collaborated with others to fraudulently obtain almost million in mortgage loans.

Santos supervised the campaign to recruit fictitious or “straw” buyers for the acquisition of 12 Newark residences. Using the identities and creditworthiness of these straw buyers, Santos, Simoes, and his accomplices were able to conceal their identities as the actual purchasers of the houses from the lender.

Santos and others convinced individuals to act as straw buyers by promising to pay each straw buyer a minimum of $5,000, find tenants to rent out the properties they purchased, and cover all property-related expenses, including property purchase fees and mortgage payments for each fraudulently obtained mortgage.

Santos, Simoes, and others also prompted the mortgage lender to receive bogus loan applications and papers.
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Simoes completed ten illegal transactions and helped prolong the scheme by fraudulently reporting that straw buyers provided the cash needed to complete the transaction, but in fact, Simoes got these funds from a shell business that was owned by Santos and other conspirators.

Simoes failed to inform the lender in a number of transactions that the Santos-controlled shell business and another conspirator would get a significant payoff from the loan proceeds.

Shortly after acquiring the residences, Santos and his accomplices breached their agreement to pay the mortgages.

The straw buyers, on whose account the mortgages were secured and who were consequently liable for making the payments, were unable to pay the illegally obtained mortgages and defaulted, requiring the lender Fannie Mae and insurers to pay more than $3.5 million in losses.

The maximum possible term for conspiracy to commit bank fraud is 30 years in jail, a $1 million fine, or double the accused’s total earnings or gross losses, whichever is greater.

The sentencing dates for Santos and Simoes are April 12, 2023, and April 13, 2023, respectively. Two additional conspirators have previously pled guilty and are currently awaiting sentencing.
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