U.S. settles with two NY-based appraisers accused of fraud

New York /
Jun.June 28, 2011 06:48 PM

Two New York-based appraisers accused of mortgage fraud settled with the U.S. Department of Housing and Urban Development for a total of $100,000 and agreed not to perform appraisals in sales involving Federal Housing Authority-insured loans for a number of years, the U.S. Attorney’s Office announced today.

James Goldberg, founder of JGG Real Estate Appraisal Services, and Robert Micheline, of P&M Appraisals, allegedly conspired to inflate the value of 11 New York area homes, so that flip sellers — Buy A Home and Mitchell Cohen were two such sellers named in the report — could unload the properties on “inexperienced homebuyers” for profit. Moreover, the inflated values allowed mortgage lender Cambridge Home Capital to issue larger loans. All 11 cases involved loans insured by HUD, and all eventually defaulted. Goldberg and Micheline earned several thousand dollars from their fraudulent appraisals, but the flippers earned hundreds of thousands of dollars in profits and the defaulted loans put the government at risk for millions of dollars in losses.

“When an appraiser fails to do the work that they were paid to do, or fraudulently inflates the value of the home, it not only affects the homeowner, but also the community around it,” said Michael Stephens, deputy inspector general for the HUD’s office of the inspector general. “This case represents an example of how we vigilantly hold appraisers accountable for the work that we count on them to do.”

Goldberg denied all wrongdoings, but agreed to pay $75,000 in civil penalties to the United States, and to not participate in HUD-related appraisals for three years. His attorney, Aurora Cassirer, was not immediately available for comment. Micheline neither admitted nor denied the allegations, but agreed to pay $15,000 in damages and $10,000 in civil penalties to the United States and to not appraise homes with HUD-insured loans for five years. His attorney, David Duhan, was not immediately available for comment. — Adam Fusfeld


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