Tuesday, December 4, 2012

Newark Feds Score Another Foreclosure Rescue Guilty Plea; Suspect Admits Role In Peddling Sale Leaseback Ripoffs To High Equity, No-Cash, Financially Distressed Homeowners

From the Office of the U.S. Attorney (Newark, New Jersey):

  • A Middlesex County, N.J., man [] admitted his part in a phony foreclosure rescue scheme that was part of a $4.4 million mortgage fraud, U.S. Attorney Paul J. Fishman announced.

    Frederick “Freddie” Grippo, 32, of Old Bridge, N.J., formerly a loan officer at Worldwide Financial Resources and an officer of Vanick Holdings, pleaded guilty before U.S. District Judge Kevin McNulty in Newark federal court to an Information charging him with one count of conspiracy to commit wire fraud.

    According to documents filed in this case and statements made in court:

    Between January 2008 and February 2010, a coconspirator of Grippo(1) was the president of Morgan Financial Equity Shares and Vanick Holdings, both based in Holmdel, N.J. Morgan Financial was held out to the public as a company that could help homeowners in financial distress who faced foreclosure on their homes through something called the “Equity Share Program.” As described by Morgan Financial and its president, the Equity Share Program involved creating a limited liability company in the name of the homeowner’s house in which the homeowner would supposedly own a 90 percent interest, with the rest to be owned by one or two private investors.

    In reality, the so-called investors invested nothing and were instead straw buyers recruited by Grippo or his coconspirator because they had good credit. Grippo and his associates then made out mortgage loan applications in the names of the phony investors for the purchase of the distressed properties.

    A homeowner in distress would come to a closing at the Morgan Financial office in Holmdel at which he or she would be given a stack of documents to sign that the homeowner thought would prevent foreclosure, but which actually transferred title to the investor. The new mortgage loan applications filled out in the name of the investor by Grippo or his associates contained materially false information about the loan applicant’s monthly income, his assets and whether the residence to be “bought” would be his primary residence.

    Once the new loan application was filled out, it would be submitted to Worldwide Financial Resources for processing, and Grippo, a loan officer at Worldwide, would see to it that the loan was approved. Once the loan was approved and the loan money was wired to the settlement agent for a given transaction, Grippo’s coconspirator would direct the settlement agent to forward a portion of those loan proceeds to bank accounts that the coconspirator controlled.

    The scheme succeeded in obtaining $4.4 million in mortgage loans. Properties whose original owners fell victim to the Equity Share Program are located throughout the metropolitan area, including in Rutherford, N.J., Monroe, N.J. and Brooklyn, N.Y.
For the U.S. Attorney press release, see Middlesex County, N.J., Man Admits Mortgage Fraud Scheme.

Go here for the Information filed by the Feds in this case, which describes the racket in detail.

(1) According to a recent story in The Star Ledger (see Middlesex man admits role in fraudulent home-foreclosure rescue scheme), Grippo along with his father, Vito Grippo, were both slammed by the office of the New Jersey Attorney General on state criminal charges for a racket peddling alleged foreclosure  rescue ripoffs:
  • The office of state Attorney General Jeffrey Chiesa announced in late September that Grippo and his father, Vito Grippo, 57, were charged in state court with promising to help homeowners facing foreclosure, only to sell the properties to unwitting investors and filing for $4.5 million in fake mortgage applications.

    Chiesa’s office also said the scheme was run through Morgan Financial Equity Shares, a company allegedly operated by Vito Grippo. According to Chiesa’s office, the elder Grippo, of Jackson, would persuade struggling homeowners to transfer their deeds temporarily to his business in exchange for financial relief.
(2) For more on this type of foreclosure rescue ripoff, see:

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