A Jersey City mortgage broker, who owned a property management company, pleaded guilty to a money laundering scheme where he conspired to steal more than $1.2 million from lenders by filing fraudulent mortgage applications, Acting Attorney General John Jay Hoffman announced.
By John Heinis/Hudson County View
Brian Lyles, 43, of Jersey City, the owner of BKL Property Management, LLC, pleaded guilty today to first-degree money laundering before Morris County Superior Court Judge Stuart A. Minkowitz, officials said.
In pleading guilty, Lyles admitted that he laundered the proceeds of a criminal scheme in which he conspired with others to falsify loan applications in order to cause banks to loan money to unqualified home buyers for the purchase of homes in Jersey City at inflated prices, according to court documents.
According to the indictment, he and his co-conspirators fraudulently obtained four loans totaling more than $1.2 million.
Allegedly, the scheme involved arranging two simultaneous sales of each property and diverting loan proceeds. Straw purchasers initially bought the homes through “short sales,” which are pre-foreclosure sales where the mortgage holder agrees to permit the home to be sold for less than the amount due on the loan.
In turn, the straw purchasers sold the homes at much higher prices to other purchasers who were the borrowers for the fraudulently obtained loans, officials said.
Those purchasers were recruited with a pitch that they could obtain investment properties with no money down and receive rental income. The loan proceeds were used to make the initial discounted purchase in the short sale, authorities said.
After making certain other required payments, Lyles and his co-conspirators stole the remaining loan proceeds by diverting them at closing, court papers show.
Under the plea agreement, the state will recommend that Lyles be sentenced to eight years in state prison, including three years and four months of parole ineligibility, while his company, BKL, pleaded guilty through its attorney to second-degree theft by deception, authorities said.
BKL must pay $200,000 in restitution. Judge Minkowitz scheduled sentencing for Lyles and BKL for March 13.
“Honest, hardworking homeowners ultimately pay the price for mortgage fraud, because it raises the cost of borrowing and results in foreclosures, which destabilize housing markets,” Hoffman said in a statement.
“By locking up con artists like Lyles, we are protecting average citizens as well as lenders.”