Real estate scammers: Have I got a bridge to sell you

TRD New York /
Feb.February 02, 2009 08:25 PM

While NYC always attracts swindlers, newest frauds are bolder than ever

 
Real estate and business swindlers have seen New York as fertile ground
ever since the Dutch governor Peter Minuit picked up the island of
Manhattan from the Lenni Lenape tribe for 60 guilders.

That’s the modern-day equivalent of $34, in a city whose
fourth-quarter average per-square-foot price was $1,162, according to
brokerage Brown Harris Stevens.

Scammers, meanwhile, have only gotten bolder with the passage
of time. In 1925, for example, New Yorker Victor Lustig convinced scrap
dealer Andre Poisson to “buy” the Eiffel Tower, which Lustig swore the
French government could no longer afford to keep up.

While real estate and business fraud has been just as
pervasive today, it isn’t as easily grasped — it’s tougher to
understand the daisy chain of investment banks paying for favorable
ratings on packages of mortgage debt in order to sell them.

And, it’s almost incomprehensible for many to fathom the
damage caused by the alleged swindle that Bernard Madoff pulled off.
That scam has taken down fortunes both inside the real estate community
and far beyond. But, while Madoff may be the most high-profile case of
late, these days, fraud has taken all shapes and forms.

Indeed, mortgage fraud, which typically involves
artificially inflating property values to extract extra cash from
lenders, has been widespread in New York. The state was among the
nation’s top 10 for mortgage fraud in 2007, according to FBI
statistics. That year, there were 46,717 mortgage fraud reports in the
state, up from 35,617 in 2006. The real problem could be even worse
than the statistics. The FBI Web site states that “the true level of
mortgage fraud is largely unknown.”

Still, some con artists do get caught, as this wall of shame from the last decade indicates.

1. Howard Adler

Total amount accused of ripping off: $1.15 million

Alleged signature rip off: A developer renovating 387 Greenwich
Street paid a tenant $292,000 so the tenant could find temporary
housing, but Adler, the tenant’s attorney, pocketed the money.

Outcome: After pleading guilty to grand larceny, forgery and
tampering with public records in 2002, Adler was sentenced to nine
years in prison.

2. Ira Berman

Total amount accused of ripping off: $3.2 million

Alleged signature rip off: A couple selling their West 88th
Street brownstone hired Berman, an attorney, to handle the closing, but
instead Berman walked away with the buyer’s $497,500 down payment.

Outcome: Berman pleaded guilty to grand larceny last February, and was sentenced to nine years behind bars.

3. Chak Yin Lee

Total amount accused of ripping off: $813,839

Alleged signature rip off: Lee, an attorney, was given $426,859 for a Brooklyn home but he never passed the money along to the seller.

Outcome: Found guilty of grand larceny in May 2005, Lee was sentenced to three years behind bars.

4. Gwenerva Cherry

Total amount accused of ripping off: $500,000

Alleged signature rip off: A buyer gave Cherry, a lawyer,
$80,000 for a down payment on a West 140th Street townhouse. Cherry
deposited it into a personal account to pay for office expenses.

Outcome: Cherry was convicted of two counts of grand larceny in November 2007 and sentenced to two to six years in prison last June.

5. James John Armenakis

Total amount accused of ripping off: $735,000

Alleged signature rip off: When attorney Armenakis failed to
appear at the closing for a $7.35 million condo at 285 Lafayette
Street, the seller suspected he had made off with the deposit.

Outcome: Armenakis, who was indicted last month, awaits trial.

6. Andrew Kissel

Amount accused of ripping off: $15 million

Alleged signature rip off: The real estate developer was charged
with swindling mortgage lenders out of $11 million, and his co-op at
200 East 74th Street out of $3.94 million, which was earmarked for
elevator repairs.

Outcome: Kissel was stabbed to
death in 2006 in a Greenwich home. At the time his attorney told the
Associated Press that he was planning to plead guilty to the charges
within days.

7. Frederic Dryer

Total amount accused of ripping off: $250 million

Alleged signature rip off: In
his “Right Place, Right Time” seminars, held in Manhattan, among other
places, the Mile High Capital Group head conned money out of attendees
for apartment complexes that were never built.

Outcome: Dryer was convicted
last summer of 44 of the 60 counts against him. He will be sentenced
this month and faces between eight and 500 years behind bars. The D.A.
is also seeking $3 million in restitution.

8. Maurice McDowall

Total amount accused of ripping off: $20 million

Alleged signature rip off:
McDowall and a number of other defendants targeted distressed
homeowners in Brooklyn and the Bronx, offering them fake refinancing
plans if they would to sell to straw buyers. In some cases the scheme
included forging signatures to steal homes.

Outcome: After pleading guilty
to conspiracy to commit bank and wire fraud, McDowall was fined $2.5
million and sentenced to 10 years in prison.

Sources: Manhattan District Attorney, United States Attorney for the Southern District of New York, news reports.

 

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