Riverside faces more scrutiny for ties to another fraudulent deal

New Jersey title insurance company Riverside Abstract is linked to yet another deal involving mortgage fraud, this time in Eureka, Illinois.

Riverside Abstract, one of the largest title insurers in the tri-state area, has faced scrutiny from Fannie Mae and Freddie Mac for its involvement in a deal in which the Department of Justice alleges the owner committed fraud. Fannie Mae has halted closing loans involving Riverside.

The Department of Justice previously alleged Riverside provided a real closing and fake closing for an office complex in Troy, Michigan. The agency alleged that the owners, Boruch Drillman and Aron Puretz, used the fake closing to obtain a larger loan than they otherwise would have been able to receive. 

Now, the Department of Justice alleges Riverside provided the closings for another fraudulent multifamily deal, in Eureka. The Illinois deal involved a similar illegal flip in which Riverside allegedly provided a real closing and a fake one. Riverside has not been charged with wrongdoing.

Riverside’s involvement in the Eureka deal was mentioned as part of legal proceedings in the Department of Justice’s charges against Puretz. Riverside and Puretz are both based in Lakewood, New Jersey. 

Puretz recently pleaded guilty for his role in a $55 million mortgage scheme. 

The Department of Justice alleges Puretz defrauded at least three lenders in addition to Freddie Mac. Puretz’s first alleged fraud scheme occurred in 2017. The agency alleges Boruch Drillman, Puretz’s co-conspirator, purchased a multifamily property in Eureka, Illinois, for $4.1 million, but they presented the lender and Freddie Mac with a fake sales contract for $5.8 million. Based on the inflated price, Freddie Mac lent $4.5 million. Riverside provided both closings. 

Puretz also hid his ownership interests in the property because he knew he would not have secured a loan had his stake been disclosed, according to federal prosecutors.

Puretz faces up to five years in jail. 

Riverside did not return a request for comment and has not yet commented to the press about its role in these transactions. Riverside ranked 10th on The Real Deal’s 2018 list of New York’s largest title insurance companies. 

In February, Riverside sent an email to employees stating that the company’s assets would be sold to nursing home mogul Avery Eisenreich because of a rumor — an apparent reference to news that Fannie Mae would halt business with the company. 

“Regrettably, the rumor had inflicted immediate harm to Riverside’s reputation and, consequently, its business,” Riverside’s owners wrote in an email to employees. “To forge a path forward, the principles of Riverside have reached a deal with Avery Eisenreich, who tentatively agreed to purchase Riverside’s assets.”

Riverside’s owners denied the rumor and insisted that the company can serve as the title and escrow agency in any transaction. 

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