Chaos in NJ Attorney’s Office Snags Mortgage Fraud Cases

The United States Attorney’s Office in New Jersey was on a hot streak of taking mortgage fraud to court.

Then, it went cold.

While more lenders have been reporting fraud, no new criminal charges have been brought since 2024, a result of internal turmoil delaying prosecutions at the office, according to sources.

President Donald Trump appointed his former personal lawyer, Alina Habba, to lead the prominent New Jersey office early in his term before a judge, Matthew Brann, disqualified Habba for sidestepping Senate confirmation. Habba’s replacements, three prosecutors, picked by U.S. Attorney General Pam Bondi, could be in a similar predicament.

On Monday, Brann said the three were disqualified to serve, since their appointments illegally bypassed Congress.

“The government is warned that any further attempts to unlawfully fill the office will result in dismissals of pending cases,” Brann wrote in his 130-page ruling.

If the government wants to keep the trio in place, it “does so at its own risk,” he said. Usually, U.S. attorneys are nominated by the president and confirmed by the Senate.

Brann’s ruling adds more uncertainty for a top enforcement group struggling with staff departures and legal challenges. These internal issues have stalled a sprawling mortgage fraud investigation where participants sought to obtain larger loans from lenders by flipping properties to themselves or inflating rent rolls.

Many of the problematic borrowers work in New Jersey, which has put the attorney’s office here at the center of enforcement efforts. Yet while more lenders are reporting fraud, the office has not brought new criminal charges because of the political volleying and related staff shortages.

New Jersey’s Trenton office led two of the most notable mortgage fraud cases. One involved investors in a scheme by Boruch Drillman, Aron Puretz and Eli Puretz to flip an office park in Troy, Michigan. Another related to fraudulent flip of a 900-unit rental in Cincinnati, Ohio, by Suffern, New York, investor Moshe Silber and his associate Fred Schulman.

Some of the defendants, including Aron and Eli Puretz, lived around Lakewood, New Jersey, and others, including Drillman and Silber, had ties to the state.

All five pleaded guilty. Judge Robert Kirsch of the District of New Jersey in Trenton presided over the cases.

State prosecutors were expected to bring charges against other players in mortgage fraud schemes, sources told The Real Deal. But the main challenge has been finding attorneys and the administrative staff to take on the fraud cases, which can be complicated and time-consuming, sources said.

Among the dozens of prosecutors who have left the office is Martha Nye, an assistant U.S. Attorney who was handling the mortgage fraud prosecutions. Nye recently left the agency for a job with New Jersey’s Attorney General, according to the New York Times.

The pause in mortgage fraud charges or indictments does not reflect the increasing problems with mortgage fraud reported by lenders and agencies, including the $752 million Fannie Mae set aside for credit losses in 2024.

Walker & Dunlop revealed it found $134 million in borrower fraud, which it expects Freddie Mac will require it to repurchase. Some of Walker & Dunlop’s suspect loans were made to Mordechai Weiss or his wife. Weiss has been subject of an investigation by the Department of Justice and the Federal Housing Finance Agency’s Office of Inspector General, sources said, and was among the defendants expected to be charged in New Jersey.

So far, no charges have been brought against him. Weiss did not immediately return a request for comment.