A Suffolk County man was charged in federal court in Manhattan Thursday with being one of three principals in an $18.5 million illegal mortgage modification swindle that officials described as the largest ever prosecuted.
Justin Romano, 40, of Blue Point, ran two "purported law firms" used as fronts for a telemarketing scheme that scammed 8,000 homeowners across the country into paying upfront fees in return for fake promises of mortgage relief, a new indictment said.
Romano and co-defendants Ped Abghari and Dionysius Fiumano, both of Irvine, California, got victims in all 50 states who had fallen behind on their mortgages to pay for help with a government program that they could have applied for online, according to the charges.
"These defendants preyed on thousands of homeowners struggling to make their mortgage payments and meet their financial obligations," said U.S. Attorney Preet Bharara.
Romano was arrested Thursday. Appearing in court unshaven, wearing shorts and a Mets T-shirt with ex-star Carlos Beltran's name and number on the back, he pleaded not guilty and was released after agreeing to a $3 million bond secured by two houses and five co-signers.
"This is a massive fraud scheme with victims in all 50 states with tens of millions of dollars in proceeds," prosecutor Edward Diskant told U.S. Magistrate Sarah Netburn.
Romano had no comment leaving court. His lawyer, Stephen Scaring, also declined to comment on the substance of the charges. "We just got a look at the indictment," he said.
The three defendants conspired to buy lists of homeowners who had fallen behind on mortgage payments, and used a telemarketing sales staff to offer assistance in applying for relief under the federal Home Affordable Modification Program in return for thousands in fees, prosecutors said.
In emails and phone solicitations between 2011 and 2014, the charges alleged, they falsely claimed they could get a lower mortgage rate guaranteed or preapproved to convince homeowners to pay the fees, said they would assist with legal services, and then did little or nothing in return.
Romano, who Scaring said is not a lawyer, ran "purported law firms" in Holbrook and Sayville that allegedly employed only one attorney each and were mainly staffed by "processors" who filled out the government program's applications, and employees who made "welcome calls" with misrepresentations.
The indictment did not name the firms, but it said that in 2012, the defendants changed the name of the telemarketing firm and one of the "purported" law firms to hide from unhappy customers.
In an email to Romano and others, Abghari allegedly warned about sending out anything with the old name, writing, "Only one client needs to put the pieces together than our laundry is hung all over the Internet on Ripoff-reports."
"I normally change names every 9 months to keep things cool and have all agencies off our backs," he said in another alleged email. "Within the next month or so you'll see a major slow down on complaints because we no longer do business under" the old names.
The government said that without paying fees, homeowners could have obtained the application for the modification program at banks or online, filled it out and submitted it on their own, free of charge.
Abghari and Fiumano were to be arraigned Thursday in Los Angeles. The three defendants face charges of conspiracy and wire fraud; both carry a maximum penalty of 20 years in prison.