Erin Davis of Yonkers sentenced in multimillion-dollar home mortgage fraud
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A Yonkers woman who helped bilk the federal government out of millions in a widespread mortgage fraud scheme was sentenced Thursday to two years in federal prison, officials said.
Erin Davis, 44, who was a sales manager at the now-defunct Queens-based Buy-A-Home real estate brokerage, was sentenced in U.S. District Court in Manhattan by Judge Denise Cote on her January guilty plea to a single count of mail, wire and bank fraud, said U.S. Attorney for the Southern District Preet Bharara.
From April 2007 to October 2010, Davis and her boss, Buy-A-Home's owner, Mitchell Cohen of Old Westbury, Long Island, recruited "unsophisticated buyers of modest means" to purchase homes at inflated prices, Bharara said. To help the deals go through, they overstated the buyers' creditworthiness in order to get the federal government to issue Federal Housing Administration-insured loans, which unlike conventional loans require little cash investment from borrowers and offer more flexible income and payment requirements. Davis and Cohen also defrauded banks into buying the federally backed loans issued to Buy-A-Home's clients in order to generate big profits, prosecutors said.
To pull this off, Davis had her firm pay off borrowers' debts, often with money funneled through the borrowers' relatives' bank accounts, in order to make the potential homeowners look more creditworthy and to make it seem like their debts were paid legitimately, officials said. The brokerage also gave cash to borrowers to fund certified checks falsely showing the potential homeowners had enough money to close on the houses, and prepared false affidavits to indicate debts were paid off legally.
The homes were typically priced at least $100,000 more than Cohen had paid for them, prosecutors said. Government authorities did not say how many mortgages or buyers were part of the scheme.
The puffed-up prices were justified to buyers with promises of repairs and improvements that were never made, officials said.
The scheme resulted in more than $7.5 million in fraudulent loans, according to prosecutors. Because many of the borrowers couldn't really afford their mortgages and they got the insurance through Buy-A-Home's false statements, a number of the homes went into foreclosure, forcing the Department of Housing and Urban Development (HUD) to pay out more than $1.5 million in insurance payments, officials said.
Cote also ordered Davis to serve three years of post-release supervision. In addition, she must forfeit more than $2.4 million and repay almost $118,000 to HUD and the Federal Housing Administration. She'll report to prison on July 5.
Cohen, who also pleaded guilty in January, was sentenced April 26 by Cote to 5 years and 10 months in prison. He must forfeit $7.5 million and repay $1.5 million to the feds. He had settled a related civil case and must pay $2.7 million in damages and penalties. He'll report to prison on June 28.
Davis' Manhattan-based lawyer, Guy Oksenhendler, said Friday he was "very disappointed" with the sentence and that Cote had ignored a recommendation of probation in imposing the prison sentence.
"The circumstances of the case and my client's character should have gotten a much more lenient sentence," Oksenhendler said. He said he'll consult with Davis before deciding whether to pursue an appeal.
Cohen's Manhattan-based attorney Andrew Miltenberg did not return a call for comment.