Yonkers woman part of $7.5M mortgage scam, feds say

A Yonkers woman and her boss at a Queens real estate brokerage schemed to illegally secure $7.5 million in home loans guaranteed by the federal government, prosecutors said.

Erin Davis, 43, a sales manager at Buy-a-Home, and Mitchell Cohen, 54, of Old Westbury, pleaded not guilty Tuesday in U.S. District Court in Manhattan to charges of conspiracy to commit wire, bank and mail fraud. They each face up to 30 years in prison if convicted.

Federal prosecutors said Cohen and Davis recruited "unsophisticated and financially unqualified" borrowers from 2007 through 2010 to buy homes that Cohen partially owned. They then submitted bogus loan application documents to banks for loans insured by the Federal Housing Administration, a part of the federal department of Housing and Urban Development.

"Mitchell Cohen and Erin Davis were engaged in 360 degrees of fraud," U.S. Attorney Preet Bharara said. "They lied to and exploited borrowers to induce them to buy homes beyond their means, they lied to banks about the borrowers' financial condition, and they lied to HUD so that the loans would be FHA-insured."

Davis was released on bail. Her lawyer, Guy Oksenhendler, declined to comment on the case. Davis could not be reached for comment. Cohen's lawyer, Andrew Miltenberg, also declined to comment.

Federal prosecutors accuse Davis and Cohen of puffing up the home buyers' qualifications for the mortgage loans by hiding payments they made to decrease the borrowers' other debts and funneling cash through the borrowers' relatives to increase their creditworthiness.

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 borrowers eventually defaulted on several of the homes that were bought throughout the New York City area, leaving the FHA holding the bag. The federal agency has lost more than $1 million in payments it had to make to banks as the loans' insurers, prosecutors said.

U.S. District Judge Denise Cote set a Feb. 11, 2013, trial date for Davis and Cohen.

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