Feds arrest LIers in nationwide mortgage fraud crackdown

Dozens of suspects, including many from Long Island and Queens, were arrested Thursday as part of a nationwide mortgage fraud investigation that officials said led to local losses of more than $29 million.

The suspects were charged in eight separate cases coordinated with Operation Stolen Dreams, a Department of Justice mortgage fraud sweep that since March has netted nearly 500 suspects nationwide, according to FBI Director Robert Mueller.

At a news conference Thursday, Manhattan U.S. Attorney Preet Bharara singled out the case of Wilfred Blas, 41, of Long Beach, and 16 other defendants as representing losses to lenders of $15 million through the use of a multitude of false payroll and tax documents to support fraudulent mortgage applications. He also noted the case of Jaime Cassuto, 40, of Seaford, and two others as allegedly involving losses of $500,000 in fees by 240 desperate homeowners who were seeking to modify their mortgages.

Bharara said a break in the investigation came last year when a tax preparer in Corona, Queens, was caught with evidence showing he provided hundreds of fake pay stubs, tax returns and W-2 forms to mortgage brokers, real estate agents and others to back up fraudulent mortgage applications.

The tax preparer, who wasn't identified, became an informant and allowed the FBI to tape his meetings with various defendants, including Blas, according to Bharara. Blas and the other alleged conspirators were charged with submitting false documents purchased from the informant to back up fraudulent loan applications and with recruiting "straw buyers" - individuals who often use fake identities and pretend to be legitimate buyers - to purchase real estate, according to a federal criminal complaint.

One of the properties allegedly purchased with the fake documents was 8 Spruce St. in Bethpage, the complaint stated. The property was purchased in November 2004 for $515,000 by John Isola of Pennsylvania, who was also charged in the case, investigators said. The loans for the purchase were made by Novastar Mortgage Inc., of Cleveland, Ohio, according to the complaint.

Isola and Blas were charged with conspiracy to commit bank and wire fraud. They were scheduled to appear late Thursday before a federal magistrate-judge.

In the Cassuto case, which also involved his brother David Cassuto, 36, of Massapequa, and Isaak Khafizov, 23, of Howard Beach, they were charged with conspiracy to commit mail fraud. They worked at American Home Recovery, a mortgage modification company in Manhattan, investigators said.

According to a criminal complaint, desperate homeowners paid fees totaling $500,000 to the company. But some victims discovered that their loans - some of which are now in foreclosure - hadn't been renegotiated, with some homes in foreclosure, the complaint stated.

A federal magistrate-judge freed the Cassutos and Khafizov on $100,000 personal bonds.