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TRENTON
– Attorney General Paula T. Dow and
Criminal Justice Director Stephen J. Taylor
announced that a father and son pleaded
guilty to theft charges 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, 65, of
Montville, pleaded guilty to second-degree
theft by deception before Superior Court
Judge Philip J. Maenza in Morris County.
He faces a sentence of five to 10 years
in state prison.
Gendel’s
son, Seth Gendel, 36, of Long Island, N.Y.,
pleaded guilty today to third-degree theft
by deception before Judge Maenza. Under
his plea agreement, the state will recommend
that he be sentenced to a term of probation.
In
addition, Martin and Seth Gendel will be
ordered under their plea agreements to comply
with any civil judgments or orders of restitution
stemming from a civil mortgage fraud suit
that was filed by the Attorney General’s
Office in March 2009.
Judge
Maenza scheduled sentencing for the Gendels
for Feb. 11, 2011. Deputy Attorney General
Francine Ehrenberg took the guilty pleas
for the Division of Criminal Justice Major
Crimes Bureau. The charges were contained
in a Dec. 15, 2009 state grand jury 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.
“These
defendants preyed on vulnerable investors,
using them in a scheme to defraud mortgage
lenders of $4.5 million,” said Attorney
General Dow. “The results were defaulted
loans, foreclosures, and communities blighted
with dilapidated homes.”
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
public needs to be wary of con artists who
seek to exploit vulnerable investors in
these tough economic times,” said
Director Taylor. “We urge members
of the public with information about financial
fraud to contact our confidential tip line.”
A
pending civil complaint filed by the Attorney
General’s Office in March 2009 charged
Martin Gendel, Seth Gendel, Casey Properties
and Lee Alan LLP with violating New Jersey’s
Civil Racketeer Influenced and Corrupt Organizations
(RICO) statute. The lawsuit charged the
Gendels and six other 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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