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TRENTON
– Attorney General Paula T. Dow and
Criminal Justice Director Stephen J. Taylor
announced that a Morris County man and his
son were sentenced today for stealing approximately
$4.5 million from mortgage lenders by providing
false information in home loan applications
handled by their Totowa-based real estate
firms, Casey Properties LLC, Lee Alan LLP
and Andrea Management LLC.
According
to Director Taylor, Martin Gendel, 66, of
Montville, was sentenced to five years in
prison by Superior Court Judge Philip J.
Maenza in Morris County. He pleaded guilty
on Nov. 17, 2010 to second-degree theft
by deception before Judge Maenza.
Also
today, Gendel’s son, Seth Gendel,
36, of Long Island, N.Y., was sentenced
by Judge Minkowitz to three years of probation
for his role in the thefts. The son pleaded
guilty on Nov. 17, 2010 to third-degree
theft by deception before Judge Maenza.
Martin and Seth Gendel were also ordered
under their plea agreements to pay a $12.6
million judgment stemming from a civil mortgage
fraud suit filed by the Attorney General’s
Office in March 2009.
Deputy
Attorney General Francine Ehrenberg prosecuted
the case for the Division of Criminal Justice
Major Crimes Bureau. The charges were contained
in a Dec. 15, 2009 indictment.
Between
December 2005 and September 2007, the defendants
deceived seven mortgage lenders into providing
approximately $4.5 million in loans for
purchases of 14 homes. Six homes were in
Paterson, six in Newark and two in East
Orange.
“Mortgage
fraud has become an increasing problem in
New Jersey because of defendants such as
these, whose elaborate criminal scheme cost
mortgage lenders $4.5 million and led to
foreclosures, ruined investors and abandoned
houses,” said Attorney General Dow.
“We will continue to aggressively
prosecute this type of fraud.”
“As
mortgage fraud and other types of white
collar crime have become more complex, we
have stepped up our game to detect these
criminal schemes and pursue the evidence
through sophisticated investigations such
as this one,” said Director Taylor.
“I commend all of the attorneys and
investigators who handled the criminal and
civil cases related to these defendants.”
An
investigation by the Division of Criminal
Justice revealed that the defendants submitted
fabricated information about employment
and earnings in loan applications and on
HUD settlement forms so that buyers could
obtain loans for which they were not qualified.
In some instances, they included false information
about rental agreements and income from
the properties. Nine buyers purchased the
14 homes.
In
addition, the defendants deceived lenders
by representing that expenses listed on
HUD forms and ultimately paid out were legitimate
expenses for home repairs when, in fact,
no repairs were authorized or made. Some
of the applications were checked off as
though the homes would be the primary residence
of the buyer, when the defendants knew they
were being purchased solely as rental investment
properties. Other false information submitted
with the applications included false savings
account balances and false occupancy letters.
The
investigation was conducted and coordinated
for the Division of Criminal Justice Major
Crimes Bureau by Sgt. Robert Walker, Deputy
Attorney General Ehrenberg and Supervising
Deputy Attorney General Terrence Hull, who
is Bureau Chief.
The
Attorney General’s Office, through
the Division of Law and Division of Consumer
Affairs, also obtained a $12.6 million judgment
against Martin Gendel, Seth Gendel, Casey
Properties and Lee Alan LLP as a result
of a civil complaint filed in March 2009
that charged them with violating New Jersey’s
Civil Racketeer Influenced and Corrupt Organizations
(RICO) statute. The lawsuit charged the
defendants with using deception –
and the credit information of their victims
– to obtain fraudulent mortgage loans
for the purchase of urban properties at
grossly inflated prices. They convinced
victims to buy homes in Newark, Paterson,
Irvington and East Orange that were the
subject of bogus appraisals, then profited
by taking fees out at closing from the inflated
equity.
The
defendants told investors that Casey Properties
would take care of all aspects of the sale
and property management, including finding
tenants, collecting rents, paying the mortgages
and making needed repairs. However, Casey
Properties never did maintain the homes
or keep up the mortgage payments. In the
end, victims had their credit ruined and
were left responsible for dilapidated homes
that had been foreclosed on and abandoned.
Director
Taylor noted that the Division of Criminal
Justice has established a toll-free tipline
for the public to report corruption, financial
fraud and other illegal activities: 1-866-TIPS-4CJ.
Additionally, the public can log on to the
Division of Criminal Justice Web site at
www.njdcj.org
to report suspected wrongdoing. All information
received through the Division of Criminal
Justice tipline or Web page will remain
confidential.
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