A broker in New York has been sentenced to 70 months in prison for falsifying FHA mortgage insurance documents in order to close millions of dollars of loans from 2007 to 2010.
According to the US Department of Justice Southern District of New York, Mitchell Cohen, the owner of Buy-a-Home Real Estate brokerage plead guilty in December 2012 to one count of conspiracy to commit wire, bank and mail fraud to carry-out a multi-million dollar mortgage scheme.
He was sentenced on 26 April by Manhattan US Attorney Preet Bharara.
Under the scheme, Cohen and others falsified borrowers’ financial documents required for approval of FHA mortgage insurance on homes they were conspired to purchase. Cohen and other conspired with home sellers to sell their homes at inflated prices to those borrowers. Buy-a-home was able to sufficiently close fraudulently originated FHA-backed loans and sell them to banks for a substantial profit, according to the Department of Justice.
“I see virtually no fraud attempts like this happening in this environment because files are scrutinized so closely,” said Jay Voorhees, owner and broker at JVM lending. “The punishment is so severe and the likelihood of getting caught is so high.”
Cohen cost The Department of Housing and Development to pay at least US$1m in insurance payments for the loans that later defaulted.
Cohen is 54 and a belonging to Old Westbury, New York.
The Department of Justice’s case was in connection with President Obama’s Financial Fraud and Enforcement Task Force.