New York Foreclosure Mill Rosicki, Rosicki & Associates Accused Of Scamming Fannie Mae
New York foreclosure mill Rosicki, Rosicki & Associates allegedly used its affiliated companies to systemically overcharge Fannie Mae for foreclosure-related services. The Department of Justice alleges the firm defrauded Fannie Mae out of millions of dollars.
The DOJ alleges the firm engaged in a scheme with two of its wholly-owned affiliates to markup foreclosure services. The complaint also alleges the firm overcharged Fannie Mae by as much as 750%. The two wholly-owned subsidiaries are Enterprise Process Service and Paramount Land.
The law firm specializes in foreclosures and executes foreclosures in New York.
The two founding partners of the firm own and control both Enterprise and Paramount. Enterprise handles the process serving and Paramount is their title search company.
The three companies performed foreclosure-related work for Fannie Mae’s mortgage servicers from May 2009 through the present.
The complaint alleges that the foreclosure mill used its own companies to serve process and perform title searches.
The complaint states that Enterprise and Paramount actually used third-party vendors to perform the majority of the work in question. They then applied exponential markups to the services performed. The two companies claimed they were doing the work themselves.
Enterprise and Paramount then submitted those allegedly marked up expenses.
The firm claimed the bills to be true and accurate. This is despite knowing that the servicers would submit claims to Fannie Mae for full reimbursement of the expenses.
Fannie Mae paid millions of dollars in falsely inflated foreclosure expenses to the three companies.
Ironically, firm owner Tom Rosicki is also a former FBI agent according to his profile on the firm’s website.
The Alleged Elaborate Scam Of Rosicki, Rosicki & Associates
The USAO in Manhattan details the alleged scam in their complaint:
Rosicki was well aware of the amount of mark-ups being applied to Enterprise’s bills. In fact, senior attorneys at Rosicki, including the Rosicki partners, were apprised of the revenue margins being made on each vendor, which ranged from 300% to 750%. For example, in an email copying the Rosicki partners dated May 7, 2009, Enterprise listed each of the individuals who performed actual process service work on behalf of Enterprise, listed the amounts charged by those process servers to Enterprise, and listed the extraordinary markups of those costs billed by Enterprise. The email lists the “ratio” of the inflated amounts billed by Enterprise as compared to the amounts billed by the process servers.
For example, a third-party vendor charged Paramount $75 for a title search; yet Paramount charged $275 for that same service. Paramount provided its bills to Rosicki, which submitted them to the Servicers and represented that they were the foreclosure expenses. The Servicers paid the bills and passed on the expenses to Fannie Mae, which paid them.
Following the initial foreclosure search, Paramount continued to make revenue through mark-ups. Specifically, for title continuation searches, which are updates to the foreclosure search performed during the course of a foreclosure action, Paramount paid its vendor $5-25 to perform the search and then billed the Servicer $125-135 for that search.
Manhattan U.S. Attorney Geoffrey Berman stated:
As alleged in the complaint, for years the Rosicki law firm exploited its relationship with Fannie Mae, a government-sponsored entity, for its own financial gain by knowingly causing Fannie Mae to pay artificially inflated costs for foreclosure-related services. This lawsuit demonstrates this Office’s continued commitment to rooting out fraud in all of its forms.