Twelve people, including attorneys and loan officers, were arrested Thursday for allegedly running a Long Island-based ring that used fake buyers with bogus identities to net $9 million in loans between 2005 and 2007, state and federal officials said.
The scam - over a period when lending practices in general ran amok - covered the loan process from start to finish, and each ring member had a specific job, from the mortgage broker employee who targeted homes for the scam to the man who posed as the "phantom buyer," said state Attorney General Andrew Cuomo.
The arrests came after several agencies - among them the U.S. Postal Inspection Service and the Department of Homeland Security - mounted a long-term investigation that included court-approved eavesdropping and surveillance.
The suspects got 100 percent financing on dozens of mortgages - above prices paid to the homeowners - on at least 16 Long Island and New York City homes, sometimes ones that they or their relatives owned, according to the federal indictment. Most of the loans are in default, officials said.
"These charges expose the corrupt conduct of industry insiders who allegedly manipulated the mortgage markets to fraudulently obtain millions in loans," said Preet Bharara, the U.S. attorney for the Southern District in Manhattan.
The suspects often reused the same fake identities, including false residence cards, the indictment said, and listed fraudulently purchased properties as home or job addresses.
In Mineola, for example, a relative of defendant and attorney Eric Finger, 44, of Mineola, sold a house in foreclosure to "Manik Chowdaorie," who was supposedly a waiter and construction foreman, documents said. But loan documents submitted showed Chowdaorie's photo was that of defendant Sakat Hossain, 43, of Jackson Heights, whose photo was used with other names in other purchases, the charges said.
The suspects - five from Long Island, five from New York City, one from Georgia and one from Mississippi - were charged with several counts, including bank and wire fraud and conspiracy to commit wire and bank fraud.
The 12 suspects could not be reached for comment and were awaiting arraignment late Thursday. Cuomo and Bharara declined further comment, saying the investigation is ongoing.
Prosecutors identified the other defendants as Jeffrey LaRochelle, 29, of Bay Shore; Frederick Warren, 35, of Miller Place; Dorian Brown, 36, of Mount Sinai; Brandon Lisi, 36, of Glen Cove; Foriduzzman Sarder, 40, of Jackson Heights; Mikael Huq, 34, of Astoria; Reginald Johnson, 36, of St. Albans; Joell Barnett, 36, of Brooklyn; Denise Parks, 43, of Olive Branch, Miss.; and Fritz Bonaventure, 28, of Lithonia, Ga.