Flipper, lender named in real estate suit

A Nassau property flipper and a lender led three appraisers in an "elaborate conspiracy" to sell overpriced homes to "inexperienced" buyers by falsifying records to get federally insured loans, the U.S. attorney's office in Manhattan said in a civil fraud suit.

Together, flipper Mitchell Cohen, Cambridge Home Capital of Great Neck, related firms and the appraisers netted more than $1.9 million in profits on 17 loans that closed in 2007, the suit said, but because those borrowers are all in foreclosure, the federal government may have to pay up to $7.5 million to investors on these bad loans.

Properties in area

It was a four-step scheme involving New York City-area properties, including some that Cambridge owned or had a stake in, investigators said.

First, Cohen, who co-owns three Queens real estate firms, would mislead buyers on monthly mortgage costs on his properties, the suit said.

Then Cambridge's co-owners, Seth Kramer and Craig Hyman, and two employees would falsify documents so borrowers could fit credit requirements for government-backed loans, the suit said. That included in one case changing a security guard's job to a higher-paid head chef on paper and omitting debt in other cases, investigators said.

Third, appraisers would inflate property values, according to allegations. They were James J. Goldberg, head of JJG Real Estate Appraisal Services in Garden City; William Buckley, a principal at Premier Appraisal Services in Richmond Hill; and Robert Micheline, a principal at P&M Appraisals in Port Jefferson Station.

Last, Cohen and Cambridge would, as an inducement, allegedly arrange to pay down-payment and closing costs in some cases, then write checks to pay off debt after the closing for some borrowers.

The case has 14 defendants, including the companies, and federal authorities are seeking about $177 million in fines and damages from each one.

Lender winding down affairs

Cohen Wednesday said he "feels good" about his job to "unclaim" the government claims. "I'm very far from a mastermind of anything," said Cohen, who owns the Buy-A-Home real estate firm in Elmhurst.

Cambridge surrendered its New York State mortgage banker license more than a month ago, after the U.S. Department of Housing and Urban Development notified the lender of alleged violations in May. HUD this week permanently revoked approval for Cambridge to make loans insured by the Federal Housing Administration.

The lender's co-owners could not be reached. But the company's attorney said the loans cited in the suit were just a "tiny fraction" of the mortgages made during the firm's 10 years. "We are disappointed the U.S. attorney's office chose to sue, especially when they were fully aware that Cambridge had already surrendered its banking license and is in the process of winding down its affairs," attorney Jim Walden said.

Goldberg's attorney, Aurora Cassirer, said her client's appraisals were not inflated and "were done in a professional and honest manner." The other two appraisers could not be reached.

Because Cambridge had limited capital to lend, the suit said, it replenished funds more easily by selling the 17 federally insured mortgages in the financial markets. In two cases investors have submitted reimbursement claims, the suit said.