13 Indicted In $100 Million Mortgage Fraud Case Prosecutors in New York have charged 13 people with running a massive mortgage fraud scheme. Authorities say they defrauded homeowners and banks of more than $100 million. Prosecutors say 25 people were involved in the scheme, and already 12 have pleaded guilty.
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13 Indicted In $100 Million Mortgage Fraud Case

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13 Indicted In $100 Million Mortgage Fraud Case

13 Indicted In $100 Million Mortgage Fraud Case

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RENEE MONTAGNE, host:

And in other fraud news, New York City prosecutors have charged 13 people with running a mortgage scam. They say the defendants bilked homeowners and banks out of more than a $100 million.

From member station WNYC, Lisa Chow reports.

LISA CHOW: Prosecutors say everyone was in on the alleged scheme: the lawyers, the appraisers and the mortgage brokers. According to the indictment, a mortgage company based in Long Island, AFG Financial Group, targeted properties in which the owners were starting to default on their mortgages. The company recruited straw buyers - people with good credit scores - to apply for a loan to buy the target property, while promising the distressed owner that they'd get to stay in the home.

According to the indictment, the company paid appraisers to inflate the value of the property. It paid off lawyers to represent all parties - the seller, the buyer and the bank - at the closing. Manhattan District Attorney Robert Morgenthau says the group fraudulently obtained a $100 million in mortgage loans.

Mr. ROBERT MORGENTHAU (Manhattan District Attorney): You know, one of the morals of this case is there's no free lunch. People with distressed properties thought they were being bailed out. They didn't look carefully at all at what the transaction was.

CHOW: Morgenthau says 25 people were involved in the alleged scheme, and 12 have already pleaded guilty.

For NPR News, I'm Lisa Chow.

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