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Disbarred attorney Barry Zornberg pleads guilty to second mortgage scam

Barry Zornberg leaves federal court in Central Islip

Barry Zornberg leaves federal court in Central Islip on Thursday, Feb. 20, 2014, after being released on bail. Credit: James Carbone

A disbarred Hauppauge attorney, already convicted of operating a mortgage fraud, pleaded guilty Tuesday to lying to FBI agents about his role in a more recent fraud case, officials said.

Barry Zornberg, 54, admitted in federal court in Central Islip that he lied when questioned about his role in the scheme, falsely claiming he told a couple not to get involved in it when in fact he had.

Eastern District prosecutor Christopher Ott had described Zornberg as "the architect" of the recent mortgage fraud after his arrest in February.

As part of the scheme, Zornberg told the owners of "distressed" properties that by "refinancing" their homes with his associates, they could eventually keep them, officials said. The victims signed over title to their homes to straw buyers who supposedly would get mortgages at more favorable rates, officials said. The victims were promised they would get back their homes after paying rent for a year.

In reality, the scammers pocketed the difference between the old and new mortgages as well as the rent without helping the victims, officials said. In all, 10 families lost a total of $1.3 million in equity, officials said.

"The defendant, a disbarred attorney . . . took advantage of people who were looking to save their homes from foreclosure," U.S. Attorney Loretta Lynch said in a statement. "A license to practice law is not a license to steal or lie."

As part of a plea agreement, Zornberg agreed to repay the victims the $1.3 million.

Zornberg also faces up to 5 years in prison when he is sentenced, according to Eastern District spokesman Robert Nardoza.

The names of the victims, some of whom lost their homes as a result, were not released. Court records indicate that some of the homes were in Glen Head, Elmont and Blue Point.

Zornberg's attorney, Glenn Obedin of Central Islip, declined to comment afterward, as did Ott.

Two of Zornberg's associates in the scam were also indicted. Kenneth Kiefer pleaded guilty and is awaiting sentencing; a second, John Rutigliano, died while the case was proceeding.

Zornberg was disbarred in 2006 after he was convicted of operating a similar scam in Suffolk County, according to court records. In that case, he was sentenced to 5 years' probation.

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