Patrick Anderson, 46, of Orange, was named in a five-count state grand jury indictment, along with AAA Investments, an unregistered company he ran out of his home which purportedly was a real estate investment and property management company. Anderson and AAA Investments were each charged with four counts of second-degree theft by deception and one count of third-degree money laundering. Ronald L. Blanchette Jr., 41, of North Brunswick, who worked for a firm that acted as mortgage broker for two of the loans, was charged in two of the theft counts.

The indictment was returned on Friday, Feb. 3, and Anderson was arrested today at his home by detectives of the Division of Criminal Justice. He was lodged in the Essex County Jail. Bail has not yet been set. Blanchette was issued a summons. The indictment stems from an investigation by the Division of Criminal Justice Financial & Computer Crimes Bureau.

“We charge that Anderson and his unregistered company stole more than $2 million from mortgage lenders by submitting fraudulent loan applications,” said Attorney General Chiesa. “This type of mortgage fraud has a damaging impact on housing markets as well as lenders, because the defendants left a trail of foreclosed homes in their wake. In this troubled economy, we are working hard to expose and prosecute those who engage in financial fraud.”

“The amount of money that changes hands at a real estate closing is a powerful lure for con artists who think they can divert the money into their own pockets,” said Stephen J. Taylor, Director of the Division of Criminal Justice. “We’ve made it a priority to investigate and prosecute major white collar crimes, including mortgage fraud and money laundering.”

Between February 2007 and October 2008, Anderson and AAA Investments allegedly deceived four mortgage lenders into providing $2,189,987 in loans for purchases of four homes: (1) $999,000 for a home in McDonough, Georgia, purchased on Feb. 9, 2007; (2) $337,487 for a home in Newark purchased on Aug. 6, 2008; (3) $445,500 for a home in Montclair purchased on Aug. 29, 2008; and (4) $408,000 for a home in Orange purchased on Oct. 27, 2008.

Anderson and AAA Investments are charged with four counts of theft by deception because they allegedly submitted or caused to be submitted fabricated labor and earnings information and bank account information on the four mortgage loan applications so that unqualified buyers would be able to obtain loans. It is alleged that the defendants also falsified U.S. Department of Housing and Urban Development (HUD) settlement forms, indicating that the buyers provided cash deposits for the purchases when they did not.

In addition, Anderson and AAA Investments allegedly deceived lenders by representing in HUD forms that certain payments were made to sellers when they were not, and that certain expenses listed on HUD forms and ultimately paid out to AAA Investments or “AAA Consultants” were legitimate debts or fees when, in fact, they were not. Anderson allegedly diverted loan proceeds from the sellers to himself and his company through these actions and other means.

Blanchette is charged in the two theft counts related to the loans for the Newark and Montclair homes because he allegedly provided false bank account statements in the names of the buyers to support the loan applications. Anderson and AAA Investments are charged with money laundering because they allegedly orchestrated a series of transactions involving loan proceeds from the Newark home sale designed to conceal that those funds were the proceeds of a crime.

Anderson allegedly used straw buyers to purchase the homes. The Georgia home was purchased in the name of a woman who was a business associate of Anderson, who believed the home was being purchased by AAA Investments. The Montclair home was purchased by a man who allegedly was paid $10,000 by Anderson and was told the deal would help the seller, who was facing financial hardship. That buyer was also the buyer for the home in Orange. He was told he would not be responsible for paying the two mortgages. The buyer in Newark believed he was investing in a rental property, which Anderson would manage for him. Anderson allegedly falsely represented in the loan applications that the buyers intended to live in the homes. In all of the cases, he allegedly failed to make the mortgage payments and the properties were foreclosed.

Supervising Deputy Attorney General Francine S. Ehrenberg, Deputy Chief of the Financial & Computer Crimes Bureau, presented the case to the state grand jury. The investigation was conducted by Sgt. Robert Walker and SDAG Ehrenberg, under the direction of Supervising Deputy Attorney General Terrence Hull, Chief of the Financial & Computer Crimes Bureau.

Second-degree crimes carry a sentence of five to 10 years in state prison and a fine of up to $150,000, while third-degree crimes carry a sentence of three to five years in prison and a fine of up to $15,000. The money laundering charge carries an additional penalty of up to $75,000. The indictment is merely an accusation and the defendants are presumed innocent until proven guilty.

The indictment was handed up to Superior Court Judge Linda R. Feinberg in Mercer County, who assigned the case to Essex County. A copy of the indictment is posted with this release at www.njpublicsafety.com.

Attorney General Chiesa and Director Taylor noted that the Division of Criminal Justice has established a toll-free tipline 1-866-TIPS-4CJ for the public to report corruption, financial crime and other illegal activities. The public can also log on to the Division webpage at www.njdcj.org to report suspected wrongdoing. All information received will remain confidential.

###