LAWFUEL – MICHAEL J. GARCIA, the United States Attorney for the
Southern District of New York, MARK J. MERSHON, Assistant
Director-in-Charge of the New York Office of the Federal Bureau
of Investigation (“FBI”), PETER J. SMITH, the Special
Agent-in-Charge of the New York Office of the Department of
Homeland Security’s U.S. Immigration and Customs Enforcement
(“ICE”), and RAYMOND W. KELLY, Police Commissioner of the City of
New York, announced the arrest of Brooklyn attorney ALEXANDER
KAPLAN on charges of participating in a multimillion-dollar subprime
mortgage fraud scheme.
The arrest was made based on a Complaint filed in
Manhattan federal court. The allegations against KAPLAN relate
to charges contained in a superseding Indictment, unsealed
yesterday in Manhattan federal court, charging 26 other
individuals with participating in a wide-ranging scheme to commit
mortgage fraud by submitting to sub-prime lenders loan
applications and supporting documents that contained false
information and material omissions. The applications and
documents included false information about the prospective
borrower’s employment, income, and intent to reside in the
property in question, as well as the fair market value of the
property, and were intended to induce the sub-prime lenders to
make loans that otherwise would not have been funded. According
to the Complaint against KAPLAN:
KAPLAN participated in a scheme to commit mortgage
fraud in the purchase of a block of ten rent-regulated
condominium apartments at 243 West 98 Street (“the Apartments”) th
in the Upper West Side of Manhattan. On two separate days in
January 2006, KAPLAN served as the attorney for the buyers and
the lenders in the closings of the Apartments. KAPLAN conspired
with others to obtain mortgages, based on false statements and
material omissions, to finance the purchase of the Apartments.
Specifically, with respect to seven of the ten
Apartments, certain sub-prime lenders were falsely told, in
mortgage applications and supporting documents, that the buyers
intended to live in the Apartments as a “primary residence.”
With respect to the remaining three Apartments, certain sub-prime
lenders were falsely told that the Apartments were to be used as
“investment properties” that earned approximately $6500 a month
in rent from tenants. None of the documents submitted to the
sub-prime lenders disclosed that: (1) certain buyers were seeking
loans to purchase more than one Apartment as a “primary
residence;” (2) each of the Apartments was already occupied by a
tenant and, therefore, not suitable for a primary residence; or
(3) the Apartments were subject to rent regulation laws that
precluded the buyer from charging $6500 in rent. In addition,
the sellers and the buyers were all related in some respect —
either by blood or by marriage — to each other. None of the
sub-prime lenders were informed of the fact that the sale was not
an “arms-length” transaction.
As attorney for the buyers and the lenders, KAPLAN
attended the closings, and submitted to the lenders signed and
completed documents, including loan application documents, on
which the buyers indicated whether the property was to be a
“primary residence” or an “investment property,” as well as other
documents that reflected whether the buyer intended to occupy the
property.
If convicted, KAPLAN faces a maximum sentence of thirty
years in jail and the greater of a $250,000 fine or twice the
gross gain or loss resulting from the crime.
The investigation of these charges was conducted by a
joint FBI and New York City Police Department task force and ICE.
Mr. GARCIA thanked each agency for their efforts in the
investigation.
Assistant United States Attorneys JONATHAN B. NEW,
KATHERINE R. GOLDSTEIN, and CHRISTINE MEDING are in charge of the
prosecution.
The charges contained in the Complaint are merely
accusations, and the defendants are presumed innocent unless and
until proven guilty.
07-177 ###
