Five Attorneys Involved in Multi-Million Dollar Mortgage Scam

Five of those individuals are lawyers - and that allegedly includes Michael Schlussel, who was disbarred in 2003. The scheme went on for six years, from 2004 to 2009. First Class Equities was the center of the scam, which allegedly involved over 100 home mortgage loans in the New York City area, and Long Island, Westchester and Dutchess counties.

Per the wsj.com article, Jacquelyn Todaro and Kevin Hymowitz, two of the attorneys charged, would allegedly find 'straw' buyers - people who were paid to act as a home buyer, but in reality had no intention of living in or paying the mortgage - for homes of sellers who were often in financial trouble.


The next phase of the scam involved attorneys allegedly receiving loan proceeds from banks and turning in fake paperwork on how the money had been distributed. Instead, their partners in crime received a cut of the proverbial pie, as it were.

Schlussel is a repeat offender - per the article, in 2009, he pled guilty to practicing without a license, when he was involved in a landlord-tenant dispute, and put in appearances at real estate closings.

Todaro and Schlussel also allegedly gave false paperwork to lenders for home equity loans and second mortgages at the same time straw buyers 'bought' real estate.

Additionally, some parties to the conspiracy would funnel proceeds through dummy corporations, and use them to 'flip' the properties to other 'straw' buyers; essentially a new mortgage was created on the same property, begetting a vicious, never ending cycle of fraud. As a result, many of the mortgages went into foreclosure.

According to the August 4^th morningstar.co.uk.com article, ''FOURTEEN DEFENDANTS CHARGED IN $58 MILLION MORTGAGE FRAUD SCHEME INVOLVING NEW YORK MORTGAGE BROKER FIRST CLASS EQUITIES'', the case was brought in coordination with President Barack Obama's Financial Fraud Enforcement Task Force. U.S. Attorney Bharara is a co-chair of the Securities and Commodities Fraud Working Group, which is part of the task force.

Bharara was quoted as saying: ''As alleged, this brazen and wide-ranging scheme defrauded banks and lenders of millions and enriched its participants, including real estate professionals who took advantage of their inside knowledge of the system to fleece it. Mortgage fraud undermines the banking system and hurts hardworking homeowners, and we will continue to work with the FBI to make sure that those who commit such crimes are caught and prosecuted.''