A Jersey City man has been indicted for running a $30 million mortgage fraud scheme throughout the state between January 2011 and November 2017, U.S. Attorney Craig Carpenito announced.
Anthony Garvin, 49, of Jersey City, was charged in a superseding indictment returned yesterday with one count of bank fraud conspiracy and five counts of bank fraud, Carpenito said in a statement.
Garvin was originally indicted on one count of bank fraud conspiracy and one count of bank fraud on January 11th.
From January 2011 through November 2017, Garvin and others engineered fraudulent short sale “flips” of various New Jersey properties with mortgages that were in default, and also fraudulently obtained numerous home equity lines of credit, or “HELOC” loans, using fraudulent documents and information, according to court documents.
The conspirators allegedly arranged simultaneous fraudulent transactions on the same target property.
In the first transaction, which involved the sale by the current owner, the conspirators convinced the financial institution holding the mortgage to accept the sale of the target property at a loss, usually to a buyer who was secretly a conspirator or an entity controlled by the conspiracy, authorities said.
In the second transaction, the conspirators allegedly flipped the same target property from the first buyer to a second buyer, who typically obtained a mortgage from another financial institution using false loan applications, pay stubs, bank account statements and title reports provided by members of the conspiracy.
The second transaction frequently closed for significantly more or even double the price of the first transaction, officials said.
Garvin and others allegedly rigged the short sale process at each step to maximize the difference in price between the two transactions and keep the victim financial institutions from detecting the fraud.
The conspirators used various kinds of phony documents and misrepresentations, including generating false pre-approval letters from a New Jersey corporation controlled by a conspirator and generating phony deeds that backdated the closing date of the first transactions.
To obtain HELOC loans, the conspirators allegedly submitted loan applications in the name of straw borrowers, who did not in fact reside at the subject properties, and used false and fraudulent information – including false pay stubs and tax information – to make it appear as though the straw borrowers made more money than they actually did.
The conspirators frequently applied for multiple HELOC loans on the same property nearly contemporaneously, withholding from each lender the existence of other applications.
The conspirators then disbursed the funds received from financial institutions – which totaled millions of dollars – into various accounts they controlled to conceal their illegal activities and split the profits, the indictment says.
The count of conspiracy to commit bank fraud and each substantive count of bank fraud are each punishable by a maximum potential penalty of 30 years in prison and a $1 million fine.