New Jersey Lawyer Fausto Simoes And Real Estate Developer Victor Santos Admit To Mortgage Fraud
A New Jersey lawyer and a real estate developer each admitted to running a $3.5 million mortgage fraud scheme.
The scheme led to over $3.5 million in losses for Fannie Mae.
Victor Santos of Watchung, New Jersey and Fausto Simoes of Millington, N.J., each pleaded guilty in federal court to a one count indictment charging them with conspiracy to commit bank fraud.
Court documents indicate Santos was a real estate developer and Simoes was an attorney.
Prosecutors allege the two conspired to fraudulently obtain $4 million worth of mortgage loans between September 2007 through November 2008.
How The New Jersey Lawyer And Real Estate Developer Defrauded Fannie Mae
Federal prosecutors alleged that Santos recruited straw buyers to purchase 12 properties in Newark. Sellinger said in a news release. They used the identities and credit of the straw buyers to conceal their identities of the actual purchasers from lenders.
Court documents show Santos induced the straw buyers with payments of least $5,000. Santos also secured tenants to lease the acquired properties and to cover costs associated with each property.
Federal prosecutors also alleged Santos and Simoes filed fraudulent and false loan applications with mortgage lenders. Thus, Fannie Mae approved the loans based on fraudulent information.
Simoes conducted the closings of 10 of the fraudulent transactions. He also helped perpetuate the fraud by falsely reporting that the straw buyers were providing cash at closing. However, Simoes received those funds from a shell company controlled by Santos and another conspirator.
Simoes also failed to disclose to the lender that the shell company would receive a payout from the loan proceeds.
In addition, Santos and his conspirators broke their promises to pay the mortgages after the properties were acquired. As a result, the straw buyers did not have enough money to pay the fraudulent mortgages and defaulted. This caused Fannie Mae and insurers to lose roughly $3.5 million.
The New Jersey Dirty Pair Are Looking At Serious Prison Time
Federal court sentencing guidelines say Conspiracy to Commit Bank Fraud carries a maximum penalty of 30 years in prison. It also carries a fine of $1 million. The defendants are also liable for twice the gross profit they made or twice the gross loss to others, whichever is greatest.
The court has scheduled Santos’ sentencing hearing on April 12, 2023. The court has scheduled the sentencing hearing for Simoes on April 13, 2023. Two other conspirators previously pleaded guilty and await sentencing, the U.S. Attorney’s Office said.