Brooklyn DA charges 18 in real estate scams

Former Council member Stewart was among the victims of loan modification fraud: Hynes

On the two-year anniversary of the creation of the Mortgage Fraud and Real Estate Crime Unit, Brooklyn District Attorney Charles Hynes and U.S. Senator Charles Schumer announced the recent arrest of 18 people involved in Brooklyn real estate scams, bringing the unit’s total number of arrests to 40 (note: correction appended).

Schumer praised Hynes for the success of the unit at a press conference this morning, and said these arrests were not only a message to the 18 prosecuted, but also other potential criminals out there.

“There are [18] people being prosecuted,” Schumer said. “To all those others who are thinking of committing mortgage fraud, and until this unit was set up thought they’d never be caught, or if they were caught they’d get a slap on the wrist, well, there’s a new sheriff in town, and you better watch it.”

Of these cases, five were loan modification or reverse mortgage scams, which are the latest schemes used in real estate fraud, officials said. Loan modification scams promise less burdensome monthly mortgage payments in exchange for an up-front fee. Since 2008, the state has outlawed that fee, but criminals take advantage of elderly homeowners and don’t deliver any services but charge as much as $2,500 in fees.

Former city Council member Kendall Stewart was among the victims of loan modification fraud, Hynes said.

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A reverse mortgage is a loan for reserved solely senior citizen homeowners that allows them to stay in their home, but sell half the equity of the home to a bank. Scam artists forge paperwork and receive the payments from the bank, leaving the victim to repay the loan or sell their property. Two alleged criminals are accused of stealing $250,000 in reverse mortgage scams.

“These are very labor intensive cases to investigate,” Hynes said, noting that Schumer introduced legislation to create similar units across the country.

One arrest that Hynes specifically mentioned was that of Ralph Baker, 61, who reported that a brownstone had been stolen from him. “He had the gall, or as we would say in Brooklyn, ‘the chutzpah,’ to come to my office claiming that his $1.7 million property was stolen,” Hynes said. “Of course he didn’t own the property; another guy named Ralph Baker owned [it].”

Michael Vecchione, the chief of the Rackets Division and lead investigator in the arrests of the 18 alleged scammers, said banks need to do a better job checking backgrounds and paperwork, rather than merely accepting the chance to make money off of these loans.

“The simplest thing they can do is walk over to the home, knock on the door and see who answers,” Vecchione said to a small group of reporters after the press conference. “If it’s not the same person that’s asking for the loan, that’s a good indication there’s a problem.”