Developer admits to $27M mortgage scam

March 23, 2009 05:49PM

A Manhattan real estate developer pleaded guilty today to a scheme to defraud dozens of investors of million of dollars through bogus mortgages, federal authorities said.

Michael Hershkowitz used the development company the Kingsland Group to convince about 70 people to lend the company more than $27 million, according to the office of the United States Attorney in Manhattan.

Hershkowitz, 52, pleaded guilty today to conspiracy to commit mail fraud, which carries a maximum sentence of 20 years, authorities said.

He must forfeit the $27 million as well as an apartment at 50 East 85th Street, court records show.

Prosecutors said he told the victims that he would use their funds to renovate 16 multi-family apartment buildings in upper Manhattan, and that the loans were secured by first mortgages on the properties.

However Hershkowitz and co-conspirator Ivy Woolf-Turk, who pleaded guilty to the same charge last month, did not hold valid first mortgages on the properties, and did not pay the principal when it was due, the US attorney said.

Later authorities discovered that the lenders did not have valid mortgages on the apartment buildings, officials said. TRD

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