Five Lawyers Charged In $58M Mortgage Fraud Scheme

Federal prosecutors in New York on Thursday charged fourteen people in an alleged $58 million mortgage fraud, including five lawyers, one of whom previously had been disbarred. The scheme, which ran from 2004 to 2009 and revolved around a company called First Class Equities, allegedly involved more than 100 home mortgage loans on properties in the New York City area, as well as Long Island and Westchester and Dutchess Counties.

Allegedly corrupt lawyers have been a common theme in several mortgage fraud schemes that have come to light in recent years in the New York area. You can read press releases on two recent mortgage-fraud takedowns that included lawyers here and here.

In the latest scheme, at least two of the lawyers charged–Jacquelyn Todaro and Kevin Hymowitz–allegedly recruited so-called straw buyers, persons who were paid to pose as home buyers, but had no intention of living in or paying off the mortgaged properties, prosecutors said.

The attorneys allegedly received loan proceeds from the banks and submitted false paperwork about how those moneys were distributed, instead making large, illicit payments to their co-conspirators, prosecutors said.

One of the “lawyers” was allegedly Michael Schlussel, who was disbarred in 2003 and wasn’t licensed to practice law, prosecutors said.

Schlussel previously pleaded guilty to practicing law without a license in July 2009. Nassau County prosecutors alleged at the time that he was posing a lawyer in a landlord-tenant dispute and had previously appeared at real estate closings.

Todaro and Schlussel also allegedly provided fake documents to lenders for home equity loans or second mortgages on the same day some straw buyers “purchased” properties, prosecutors said.

Counsel for the accused lawyers couldn’t immediately be located for comment Thursday.