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Blue Point man pleads guilty in mortgage fraud scheme, prosecutors say

Justin Romano leaves federal court in Manhattan Thursday,

Justin Romano leaves federal court in Manhattan Thursday, Aug. 7, 2014, after his arraignment on charges related to a mortgage fraud scheme. Credit: Bryan Smith

A Blue Point man pleaded guilty to orchestrating a mortgage modification fraud scheme that defrauded homeowners nationwide out of $18.5 million, federal prosecutors said Tuesday.

Justin Romano, 41, of Blue Point, and Ped Abghari, a 38-year-old Irvine, California, man who also went by "Ted Allen," ran a trio of businesses that misled and stole from poor families trying to enroll in a federal program helping those struggling to pay their mortgages, said the U.S. attorney's office in the Southern District of New York.

The Home Affordable Modification Program, created in 2008, was designed to help people who could no longer afford their home loan payments.

Those seeking to modify their monthly payments could fill out a form and submit it to their mortgage provider with proof of their financial need. If approved, applicants could modify their payments to what they could afford. Abghari ran the firm purporting to offer the mortgage modification service in Irvine, and Romano ran two law firms based in Holbrook and Sayville that worked with Abghari's company.

The men persuaded more than 8,000 homeowners to pay high upfront fees and performed little or none of the services they claimed to offer, such as legal representation for negotiating approval, prosecutors said.

"Instead of helping to lift desperate homeowners out of debt, Abghari and Romano pushed them deeper in through exorbitant fees for mortgage modification services they never intended to provide," U.S. Attorney Preet Bharara said.

Romano pleaded guilty Monday to wire fraud and conspiracy to commit wire fraud before U.S. District Judge John F. Keenan in Manhattan federal Court. Both charges carry up to 20 years in prison.

Abghari pleaded guilty to the same charges, as well as misprision of a felony, which carries a maximum sentence of 3 years in prison. Both men will be sentenced Jan. 14.

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