It was a “sweet deal” for the 17 people who made off with more than $20 million from local homeowners, banks and the Nassau County government, according to officials. That was until they were caught.
Nassau County District Attorney Kathleen Rice announced Wednesday that her office filed four indictments against the men and women allegedly involved in mortgage fraud and identity theft schemes. All together they have been charged with 108 crimes in what is being considered the largest takedown of mortgage fraud in Nassau County history.
Rice said that her office conducted a two-year investigation in help from the New York State Banking Department, named “Operation: Sweet Deal,” after one of the scheme’s ringleaders, James Robert Sweet, 43, of Westbury.
Sweet, along with Dwayne Benjamin, 44, of Westbury, and numerous conspirators face charges ranging from Enterprise Corruption (under New York State's Organized Crime Control Act) and first-degree grand larceny to money laundering identity theft and conspiracy. By following the money and paper trail, investigators were able to uncover and stop their criminal organization.
The operation began 6 years ago, Rice said, when the scammers, under the leadership of Sweet and Benjamin, allegedly began convincing straw buyers to purchase properties in the County, using their own personal information.
According to the DA’s office, Sweet told some of the straw buyers that they would be assisting homeowners who were trying to sell their houses from foreclosure, as well as making a good investment. What they didn't know was that they were actually helping the Sweet Deal members to line their pockets through mortgage fraud schemes. Sweet and his conspirators would typically pay straw buyers $10,000 for the use of their name and personal information.
They would then negotiate with the sellers to purchase properties that were either already on sale or in distress at a higher price than what was being asked and then arrange to keep the difference in what the bank was lending and what the seller wanted as a profit.
“The scam worked because Sweet Deal never intended to make any payments on the properties,” Rice said at a press conference at Wednesday. “They only intended to walk away with the profit. Most of the homes ended up in foreclosure.”
She pointed out that investigators found one case where the scammers purchased the same West Hempstead home twice in a just over a two-week period. On Nov. 28, 2005, a straw buyer allegedly took out a $390,000 mortgage to pay for the house on Tyler Street, but due to a delay in filing of paperwork in the County's Clerk's Office, the Sweat Deal members were able to quickly “purchase” the home again. They had a second straw buyer take out another $390,000 mortgage 18 days later. The official paperwork still listed the original homeowner's name.
This allowed them to use cash from the first mortgage to pay off the original owner's outstanding mortgage and keep the second, which after closing costs amounted to $361,000. Again, they let the house slip into foreclosure.
This apparently wasn't enough though, because according to Rice, the group began to branch out into more lucrative thefts by recruiting relatives, friends and colleagues to steal the identities of home buyers and property owners and impersonate them at the closings.
“Using these stolen identities, Sweet Deal members could impersonate both the home buyer and seller and keep all the proceeds of the phony home sale,” she said, explaining that they were able to accomplish this with at least six properties in Westbury.
Sweet Deal members would also play the part of paralegals and even stole an attorney's identity to set up a bank account to launder money through, according to Rice.
“At these closings everything was fake, except the money being stolen,” she said. “Once they had stolen the mortgage proceeds, they had no reason to keep making mortgage payments and they let the property fall into foreclosure.”
As for the actual property owners, “they were unaware it was being sold from under them,” said Abigail Margulies, head of the Crimes Against Real Estate division.
She explained that because the owners were in the dark and the buyers and sellers were fictitious, no one was making the mortgage payments, which caused the homes to foreclose.
“They are pursuing remedies in civil court,” she added.
A second scheme involved defrauding the County government by renting properties they had purchased through straw buyers before and during foreclosure proceedings. Some of these properties qualified for low-income subsidies through the county, but the checks could only be issues to the owners who were on record, in this case, the straw buyers. To get around this, Sweet Deal members allegedly submitted fake deeds to the program indicating they owned the properties and were able to steal more than $80,000 in subsidies.
“Sweet and his co-conspirators used their knowledge of the mortgage industry for their own financial gain at the expense of innocent consumers, financial institutions and the Nassau County government,” superintendent of Banks for New York State Richard Neiman said. “[We] will continue to work with our law enforcement partners to ferret out these fraudulent schemes and bring unscrupulous individuals to justice.”
Both Sweet and Benjamin now face enterprise corruption, two counts of Grand Larceny in the first and third degrees, and 32 in the second. They have also been charged with money laundering, scheme to defraud, conspiracy, identity theft and falsifying business records. If convicted, they could serve a maximum jail sentence of 25 years.
They could have company though. Twelve of the 15 others indicted in the case also face up to 25 years if found guilty.
- Real estate broker Stephanie Watkins, 36, of Amityville.
- Mortgage originators Sophia Welsh, 43, of West Babylon, John DiCanio, 37, of Islip Terrace, and Carlos Irizarry, 34, of Long Beach.
- Attorneys Larinzo Clayton, 45, of Westbury, and Ethan Serlin, 40, of Dix Hills
- High-end car dealer Alfred Gary, 44 of Englewood, N.J.
- Appraiser Radamex Velasquez, 34, of Valley Stream.
- Straw buyers James Grant, 35, of Brooklyn, and Allen Woods, 35, of Hempstead.
- Vertus Vielot, 35, of Baldwin, and Yves Mathieu, 45, of Elmont.
They also face different charges including enterprise corruption, money laundering, conspiracy and grand larceny.
Three of the defendants were only charged with falsifying business records and face up four years in prison. They are tax preparer Lyshaan Hall, 33, of Brooklyn, and two bank employees, Sonia Panameno, 29, of Mineola, and Roxanna Calero, 33, of Brooklyn.
Panameno had worked for Bank of America and Calero for Washington Mutual.
The banks affected by the fraud included those that still exist and some that have since gone under or merged with others.
“Mortgage fraud hurts every honest, hard-working citizen by making it more difficult to get good mortgage rates and destroys communities when houses fall into foreclosure and end up board-up or sold for less than their original value,” Ride said. “Thanks to the meticulous and thorough work by prosecutors and investigators in my office we were able to pull down this $20 million house of cards.”