A disbarred Hauppauge attorney was arrested Wednesday for lying to FBI agents about his role in a mortgage scam that purported to help owners save their homes from foreclosure, officials said.
Barry Stephen Zornberg, 54, was "the architect" who headed the scheme that defrauded at least 10 families of a total of $1.3 million in equity, officials said. Some of the victims lost their homes as a result of the scam, according to Assistant U.S. Attorney Christopher Ott.
The names of the victims or the addresses of the homes involved were not released. Court records indicate that the homes involved included ones in Glen Head, Elmont and Blue Point.
Zornberg pleaded not guilty before magistrate A. Kathleen Tomlinson in federal court in Central Islip and was held without bail. His attorney Nancy Bartling of Mineola declined to comment.
According to court records, Zornberg was disbarred in 2006 after being convicted in Suffolk for operating a similar scam. In that case, Zornberg was sentenced to 5 years' probation.
In yesterday's indictment, Zornberg was charged with telling the couple who owned the Glen Head home to go ahead with what amounted to the alleged mortgage scam while claiming in an interview with FBI agents that he had tried to dissuade the couple from involvement.
Two of Zornberg's alleged accomplices in the scam were previously indicted on fraud charges in the case, according to court records. One pleaded guilty and is awaiting sentencing, and one died while the case was ongoing.
In the overall scam, homeowners whose houses were threatened with foreclosure were persuaded to sign over title of their properties to straw buyers who would get mortgages at more favorable terms. The owners were promised that they would get their homes back in a year, after paying rent to the straw buyers. In fact, the scammers pocketed the mortgage monies and the rent without providing relief to the victims, officials said.
"The defendant, a disbarred attorney, lied to federal investigators about the role that he played in this fraud scheme, which took advantage of people who were looking to save their homes from foreclosure," Eastern District U.S. Attorney Loretta Lynch, said in a statement.