Federal prosecutors claim that a New Jersey real estate developer and a lawyer admitted to operating a complex mortgage scheme that caused financial institutions losses of more than $3.5 million.
U.S. Attorney Philip R. Sellinger said that 63-year-old Watchung developer Victor Santos paid “straw” buyers $5,000 each to acquire a dozen buildings in Newark and then find tenants to lease them.
The U.S. attorney claimed he and another conspirator, 69-year-old Millington attorney Fausto Simoes, paid all the bills.
Sellinger said that “Santos, Simoes, and others” were to blame for the mortgage lender receiving bogus loan applications and supporting paperwork.
He explained that “Santos, Simoes, and its collaborators used the identity and credit of these straw buyers to conceal their identities from the lender as the genuine purchasers of the houses.”
Sellinger claimed that attorney Simoes “conducted the closings of 10 of the fraudulent transactions” and “helped perpetuate the fraud” by reporting inaccurately that the straw buyers were providing the cash needed at closing when in reality Simoes received the money from a shell company controlled by Santos and another conspirator.
Simoes “failed to inform the lender that, in a number of transactions, the shell business owned by Santos and another conspirator would receive a big dividend from the loan proceeds,” he said.
Santos and his associates “broke their agreements to pay the mortgages shortly after acquiring the properties,” according to Sellinger. Due to a lack of funds, “the straw buyers, in whose names the mortgages were secured and who are responsible for the payments, defaulted.”
He claimed that about $3.5 million was lost by the lender, Fannie Mae, and insurers.
Sellinger claimed that Santos and Simoes, along with two other alleged accomplices, accepted plea bargains from the government to avoid facing the repercussions of a trial.
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They appeared before U.S. District Judge Michael A. Shipp in Trenton via videoconference to enter guilty pleas to conspiracy to conduct bank fraud.
Santos’ sentence has been set for April 12, 2023, and Simoes’ for April 13. Two further co-conspirators who have come out in confession are currently awaiting sentencing.
Special Assistant U.S. Attorneys Charlie Divine and Kevin Gregory of the Federal Housing Finance Agency’s Office of Inspector General were assigned to Sellinger’s Economic Crimes Unit in Newark, and they are credited with leading the investigation that resulted in the guilty pleas.