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For Immediate Release:
For Further Information:
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March 4, 2011

Office of The Attorney General
- Paula T. Dow, Attorney General
Division of Criminal Justice
- Stephen J. Taylor, Director

Media Inquiries-
Peter Aseltine
609-292-4791
Citizen Inquiries-
609-292-4925

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Morris County Man Sentenced to Prison for Falsifying Applications to Obtain $4.5 Million in Home Loans

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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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