Kaplan Found Guilty in Sub–Prime Mortgage Scam

02/13/09

Assistant U.S. Attorneys, Avi Weitzman and Jonathan New, were victorious in convincing the jury that Kaplan was a key player in a conspiracy that defrauded lenders of millions of dollars. According to the legal findings, Kaplan’s part in the scam was instrumental, he purposely mislead the lenders in transactions by representing the buyer, the bank and the seller. Select mortgage brokers, in particular, Alexander Lipkin, would then use the buyer's identities to obtain large loans on properties and would often sell properties soon after utilizing bogus documents.


During the summations in the two-week trial, Attorney Avi Weitzman proclaimed Kaplan a ''liar and fraudster who engaged in a massive fraud.” According to Weitzman, ''his lies were all intended to protect his criminal partners and to make sure the real estate transactions looked legitimate.'' Weitzman added, ''He did so by telling lies to banks over and over again. He lied about who the real purchasers were and he lied about the amount of money he disbursed from the loan proceeds.

Kaplan did not act alone, 27 other people pleaded guilty and were indicted in the conspiracy. Only one other accused, pleaded not guilty. Lipkin admitted to his participation in two fraud scams that took place in 2008 and is awaiting sentencing.

Lipkin’s part in the conspiracy was part of the foreclosure ''rescue scheme' which involved convincing distraught homeowners to transfer their house deeds to 'straw' buyers who would save their properties with promises to turn the deed back over to the homeowners at a later time. In conjunction with the straw buyers, Lipkin and his band of thieves, would then successfully take out millions of dollars in loans on the property. The loans would not be paid back thus leaving the banks and straw buyers liable.

The scam included a secondary scheme in which Lipkin and others used fraudulent documents to apply for millions of dollars to lenders and cost the lenders more than $4.5 million.

According to the prosecutors, Kaplan was one of several crooked lawyers who helped assist with the scams. His part included signature scam, and purchase of a block of apartments in Manhattan at 243 West 98th Street. Lipkin, Kaplan and many others, never revealed to the bank that the units were being lived in with some tenants paying as little as $393 monthly and that it was under rent control.

For Kaplan's troubles, he pocketed between $850 to $1100 in closing fees and additional monies for title fees. Weitzman surmises that Kaplan made ''tens of thousands'' in fees regarding the West 98th Street scam.

Diarmuid White, Defense lawyer of White & White in Manhattan, said that when his client took the witness stand, he was unable to remember important details and claimed paralegals assisted with a good portion of the work. He admitted that he didn't file his 2006 income taxes and blamed his accountant. White was hoping Kaplan would be portrayed as an ''ambitious' young attorney who let matters slide thorough his own mismanagement and careless business practices.

White told the jury during opening statements that there was ''no question he did not act as diligently as he should have.'' He asked the jury why Kaplan ''would risk everything — his law career, his business, everything, to willingly participate in such a conspiracy?''

Kaplan, after graduating from the New York Law School was admitted to the bar in 1999. He started his career practicing immigration, matrimonial and real estate law with a small firm and then went to work for a Brooklyn real estate firm. Later, Kaplan and his cousin, Gary Lerner, started their own firm with a focus on real estate transaction. At the peak of their practice, Kaplan became a closing agent for up to 60 banks. By 2004, Kaplan employed several teams of paralegals to handle the transactions and was managing up to 10 closings daily. At the same time and in the same building, Kaplan built a title company called Executive Settlement Services and employed 10 workers to help with the business.

White told the jury during opening arguments, ''Why send this out? Why not have a title company that I control and all the fees that it generates? Now that's good business, but it's not so good for a lawyer because there is a potential conflict of interest.''

White went on to say that Kaplan ''spread himself too thin'' because ''he couldn't possibly oversee every transaction.'' During his summation, White admitted that Lerner & Kaplan was ''run poorly, not well supervised, not managed properly.'' White surmises that ''there was too much emphasis on growing the business. The practice was a mess.''

White concluded that Lipkin was the ringleader and lied to all the parties involved including the straw buyers, the banks, the other defendants and also Kaplan.

According to White, Kaplan was a fool. ''He was a fool, a total fool. He was ripe for Lipkin to manipulate and that's what happened. He was duped.''

However, Attorneys Weitzman and New convinced the jury that it wasn't possible for Kaplan to sign off on several closing documents especially the West 98th Street property, “without knowing or at least consciously avoiding, the truth.'' According to Weitzman, Kaplan could be compared to the ''three monkeys who hear no evil, see no evil and speak no evil.'' Weitzman said that ''Essentially, Kaplan's defense is 'I didn't see nothing. I didn't hear nothing.''

Kaplan may face a long prison sentence, upwards of 30 years and fines in the excess of $1 million, but under the U.S. Sentencing Guidelines he could receive less.