The head of a Long Island mortgage bank and five others were charged Tuesday in federal court in connection with a massive $30 million bank fraud scheme targeting real estate in Nassau and Suffolk counties, authorities said.
Aaron Wider, the head of HTFC Corp. in Garden City, was arrested by FBI agents Monday along with four of the five suspects allegedly involved in the scheme. The fifth targeted suspect has agreed to surrender Wednesday, authorities said.
Wider, 50, of Copiague, and the five other defendants, identified as Manjeet Bawa, 46, of Dix Hills; Joseph Ferrara, 70, of Long Beach; Eric Finger, 48, of Miami; Joseph Mirando, 54, of Centereach; and John Petiton, 68, of Garden City, each faces up to 30 years in prison if convicted.
They were charged with conspiracy to commit bank fraud involving mortgages, according to an indictment filed in federal court in Central Islip. Finger was identified as an attorney who practiced in Mineola; Petiton, as an attorney in Garden City; and Mirando, as a real estate appraiser, according to court papers.
The charges detail a prime example of the type of corrupt mortgage-lending practices that led up to the bursting of the real estate bubble nationwide and the financial collapse of 2007 and 2008, said Eastern District U.S. Attorney Loretta Lynch in a statement.
"Instead of using their skills in banking, the law and investing to assist individuals pursuing the American dream, the defendants cooked up a sophisticated scheme that defrauded lenders and then fed toxic debt to the investing public."
The six are accused of vastly inflating the value of 19 homes in Nassau and Suffolk by as much as 80 percent, obtaining mortgages from a number of banks based on the inflated value, and then reselling the "toxic" mortgages in the secondary mortgage market to other banks and investors, according to an indictment filed by federal prosecutor James Miskiewicz.
The defendants first contracted to purchase the homes at a reasonable market price from owners who were not involved in the scheme, Miskiewicz said. They then inflated the values of the homes through unrealistically high appraisals and then obtained the money to actually purchase them through mortgages from banks and financial institutions, according to the indictment.
They then used the inflated mortgage money to pay off the homeowners and pocket the difference between the realistic market price and the inflated value, the prosecutor said. Next, they sold the now so-called "toxic" mortgages in the secondary market to banks and other investors at their supposed false, inflated value.
All the homes ended up in foreclosure in the scheme, which operated between 2003 and 2008, officials said. The homes involved were in Amityville, Baldwin, Bellmore, Copiague, Dix Hills, Freeport, Masasapequa, North Massapequa and Wantagh, the indictment said.
Wider pleaded not guilty at his arraignment in federal court in Central Islip Tuesday and was held pending trial by federal Magistrate A. Kathleen Tomlinson after he said he could not come up with a bail package.
His attorney, Tracey Gaffey, declined to comment afterward.