It's the third time in two months officials reveal mortgage-related fraud
A New Jersey man was sentenced on Thursday to 108 months in prison for conspiring to obtain mortgage loans to finance the sale of properties to unqualified buyers and securities fraud, the US Department of Justice announced.
In a prepared statement, Attorney for the US Vikas Khanna said Maurice Bethea, 54, of Newark, N.J., induced a victim into investing more than $1.2 million into real estate companies under false pretenses. Bethea previously pleaded guilty before US District Judge Susan D. Wigenton to a charge of one count each of bank fraud conspiracy and securities fraud, officials said.
From May 2009 through June 2012, justice officials said, Bethea and others recruited buyers to purchase multi-unit residential properties owned by Westinghouse Redevelopment Act Inc., a company Bethea controlled. Bethea and his conspirators used false information about the buyers’ assets and income to support fraudulent mortgage loan applications to a mortgage company, according to the advisory.
“They falsified the buyers’ loan application by boosting liquid assets,” according to the advisory. “Bethea and his conspirators transferred cash from Westinghouse’s and others’ accounts to the buyers’ bank accounts and falsified documents to hide the transfers.”
After the loans were approved, officials continued, Bethea and his conspirators caused the return of the funds to Westinghouse. When it came time to close the transactions, officials said, Bethea and his conspirators defrauded the mortgage company by hiding that Westinghouse and others, not the buyers, provided the cash to close the transactions. Justice officials said the buyers ultimately were not able to repay the loans, which resulted in losses to several financial institutions.
The US Attorneys Office for the District of New Jersey described the scheme:
- “From April 2017 through May 2018, Bethea deceived an individual into investing in Bethea’s real estate companies. Bethea told the victim that he would invest his money in companies that Bethea owned and that were in the business of buying foreclosed homes, renovating the homes, and then reselling the properties.
- “Bethea falsely promised the victim that Bethea would pay him a 12% return on his investment and $10,000 each time one of Bethea’s companies sold a property.
- “In reality, Bethea took the victim’s $1.27 million investment, spent the money for other purposes, and then lied to the victim about Bethea’s failure to make monthly interest payments and the condition of the properties under Bethea’s control.”
The 108-month sentence includes a 21-month sentence for violation of supervised release; Bethea was on supervised release for an earlier conviction at the time he committed the counts he pleaded guilty to in this case. In addition to the prison term, Judge Wigenton sentenced Bethea to five years of supervised release. Restitution will be determined later, officials added.
It’s the second time in as many days that justice officials have announced prosecution in a mortgage fraud case. Earlier this week, Department of Justice officials revealed that Sergio Lorenzo Rodriguez of Orange County, Calif., pleaded guilty to one count of wire fraud in connection with a fraudulent foreclosure rescue scheme that took in at least $5 million in prohibited advance fees from thousands of financially distressed homeowners.
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In that case, justice officials described how Rodriguez, 47, and a co-conspirator, from around mid-2015 through August 2020, owned and/or managed a series of mortgage modification companies through which they perpetrated a scheme to defraud and attempt to defraud, through deceptive marketing practices, financially distressed consumers who were facing or were at imminent risk of foreclosure.
And in February, an Atlanta real estate agent was charged for running multi-year mortgage and real estate commission fraud schemes. Eric Hill, 52, faces two years and six months in federal prison – to be followed by three years of supervised release – after pleading guilty to conspiracy charges. His accomplice, Robert Kelske, 54, also pleaded guilty and is scheduled to be sentenced on April 14, justice officials said.
According to the US Attorney’s Office for the District of Atlanta, Hill and Kelske conspired with 12 other people to run a $21 million mortgage scam and separate scheme to defraud his employer, a national real estate developer, out of over $480,000 in real estate commissions.