TRENTON
- Attorney General Anne Milgram announced
that a Ewing couple and their real estate
firm were indicted on charges they stole more
than $600,000 from home sellers in connection
with 11 home sales. They are also charged
with defrauding three mortgage companies of
$641,800 by falsifying the earnings of applicants
for three home loans.
According
to Director Deborah L. Gramiccioni, the Division
of Criminal Justice Major Crimes Bureau obtained
a state grand jury indictment yesterday charging
Joann Smith, 44, her boyfriend, Wayne Betha,
39, and their real estate company, S&B
Property Management and Maintenance LLC of
Trenton, with first-degree money laundering,
first-degree conspiracy, second-degree theft
by deception (2 counts) and third-degree failure
to file corporate tax returns, among other
crimes.
Arrest
warrants were issued for Smith and Betha,
who remain at large.
“These
defendants are charged with preying on people
who had to sell their homes due to financial
hardship, taking advantage of their trust
and lack of financial sophistication,”
said Attorney General Milgram. “They
stole from people who had little or nothing
to spare.”
It
is alleged that between August 2006 and February
2008, the couple stole more than $600,000
from clients who agreed to have Smith sell
their homes. Smith and Betha allegedly diverted
proceeds of the sales into their own bank
accounts for their personal use, deceiving
the sellers into believing they were not entitled
to all of the profits from their homes. Most
of the sellers were having serious financial
problems and could not continue paying their
mortgages. The 11 homes are in Trenton (4
homes), Ewing, Hamilton (2 homes), Orange,
Willingboro (2 homes), and Camden.
In
arranging for sales of three of the homes,
Smith and Betha allegedly provided false information
about the salary or wages of the buyers on
settlement forms filed with the U.S. Department
of Housing and Urban Development (HUD) and
mortgage applications, causing three mortgage
companies to issue loans totaling approximately
$641,800.
Smith
and Betha are also charged with misconduct
by a corporate official (2nd degree) and failure
to file a tax return (3rd degree). No corporate
business tax returns were filed with the State
of New Jersey for S&B for 2005 through
2008. Smith also failed to file state personal
income tax returns for those years. Betha
failed to file a state personal income tax
return for 2007.
The
couple allegedly used a variety of schemes
to fraudulently divert proceeds from the home
sales into bank accounts maintained by Smith
and S&B, which they allegedly used to
launder the stolen funds. They represented
to sellers and title companies that monies
were owed to them for expenses, including
property renovations and repairs that were
never done and exorbitant consultant fees
that they claimed the sellers had authorized.
Many of the checks issued by the title companies
handling the property sales were written to
the home sellers, but Smith convinced the
sellers to sign the checks over to her for
payment of business expenses and fees.
It
is alleged that, in several instances, the
defendants falsely indicated on HUD forms
and tax forms that the sellers directly received
all of the profits from the home sales. They
also omitted to tell sellers that they were
agreeing in mortgage closing documents to
pay large, unauthorized “seller’s
concessions or seller’s assists”
to the buyers.
The
victims were not financially sophisticated.
They did not understand the details of the
property closings and, because of their financial
woes, were anxious to be free of the obligation
of paying mortgages they could no longer afford.
Smith and Betha allegedly took advantage of
these facts to steal the victims’ profits
from the home sales.
Smith
sometimes wrote false notations on checks
written from her account and the S&B account
to make it appear that payments were made
for home repairs. Other times she would write
a small check to the seller and write “gift”
in the memo portion of the check. Smith and
Betha used the diverted funds for personal
expenses, withdrawing hundreds of thousands
of dollars, primarily as ATM withdrawals,
checks written to cash, and checks written
to Betha.
The
Division of Criminal Justice is focusing on
complex white collar crime cases, including
mortgage fraud and money laundering. During
the past two years, the Division has filed
or resolved eight cases involving $12 million
in mortgage or financial fraud. The cases
include the indictment in June 2009 of Yi
Feng Reid, Yu Jane Chen and other co-defendants
in an alleged $1.1 million conspiracy involving
the use of stolen identities to obtain mortgages,
other types of loans and credit cards; the
sentencing in February 2009 of Spiro Pollatos
to 13 years in prison for orchestrating a
$2.7 million money laundering conspiracy involving
a series of mortgage fraud and investment
schemes; and the sentencing in June 2009 of
Michael Rumore to 15 years in prison for stealing
$4 million entrusted to him as an attorney
for real estate closings.
“It
is troubling that dishonest operators see
these tough economic times as an opportunity
to cash in on others’ financial woes,”
said Director Gramiccioni. “We are committed
to vigorously investigating and prosecuting
financial fraud.”
Deputy
Attorney General Francine Ehrenberg presented
the case to the state grand jury. The investigation
was conducted and coordinated for the Division
of Criminal Justice Major Crimes Bureau by
Detective Martin Farrell, Analyst Rita Gillis,
and Deputy Attorney General Ehrenberg. The
Mercer County Prosecutor’s Office provided
assistance.
The
first-degree money laundering charge carries
a maximum sentence of 20 years in state prison,
including a period of parole ineligibility
equal to one-third to one-half of the prison
sentence imposed, and a fine of up to $500,000.
The defendants also could face an additional
anti-money laundering profiteering penalty
of up to $500,000. Second-degree crimes carry
a maximum sentence of 10 years in state prison
and a $150,000 fine, while third-degree crimes
carry a maximum sentence of five years in
state prison and a $15,000 fine.
The
indictment is merely an accusation and the
defendants are presumed innocent until proven
guilty. The indictment was handed up to Superior
Court Judge Maria Marinari Sypek in Mercer
County.
The
indictment is posted with this release at
www.njpublicsafety.com.
The
Division of Criminal Justice has established
a toll-free tipline: 1-866-TIPS-4CJ
for the public to report corruption, financial
fraud and other suspected crimes. Additionally,
the public can log on to the Division of Criminal
Justice Web page at www.njdcj.org
to report wrongdoing. All information received
through the Division of Criminal Justice Corruption
Tipline or Web page will remain confidential.
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