Now that an executive of a Glen Rock property management company has admitted his role in a $91.5 million loan fraud, questions remain about an "unnamed co-conspirator."
Barton Schack, 65, of Ringwood, told a federal judge in Newark this week that he helped the other participant fraudulently secure a massive commercial mortgage loan by lying about how many tenants were in a network of medical office buildings used as collateral and how much rent they’d paid, Acting U.S. Attorney Rachael A. Honig said.
The pair then pocketed millions of dollars in rent from the properties -- which was supposed to go to repaying the debt -- and spent much of it on themselves instead, the U.S. attorney said.
It wasn't long before they went bust.
Although she didn’t identify him by name, Honig saud the second man was the founder and CEO of both Sovereign Medical Services and Regent Medical Properties, both headquartered in the same Harristown Road building in Glen Rock.
That would be John H. Hajjar, of Cresskill, according to records, various online postings and those who know him personally.
Schack was Hajjar’s chief investment officer at Regent, which managed Sovereign’s network of “multi-specialty out-patient medical practices,” Honig said.
As she explained it: The individual borrowers of the $91.5 million were listed as “special purpose” entities in which Hajjar held majority ownership at the 13 Sovereign office buildings in New Jersey, New York and Florida.
This allowed the conspirators to “misrepresent the physical occupancy status of certain affiliated tenants and the Medical Properties’ true rental income” when applying for the loans, Honig said.
The pair avoided accelerated payment once they secured the loans by submitting bogus monthly financial statements that concealed the properties’ actual financial status, the U.S. attorney said.
Instead of putting rent money from the various medical office tenants to repay the debt, the men used it cover Regent operational costs and “personal credit card bills of up to approximately $80,000 per month and private jet payments,” among other uses, she said.
All told, the pair diverted millions, Honig said.
Within three years, they were 60 days behind on payments, she said.
In February 2020, Hajjar’s individual companies declared bankruptcy.
As of this weekend, her office hadn’t addressed the status of Hajjar, a philanthropist who was born in Syria and raised in Paterson.
Records show that Hajjar came to the U.S. with his family in 1968. He operated a urology practice before founding Sovereign, which boasted clinical expertise and state-of-the-art equipment.
Schack, a Rockland native, has a distinctive lineage.
His late father, Harvey H. Schack, of Spring Valley was a renowned artist, author, lecturer and business owner, as well as a special officer of the Mossad, a member of the Rockland County Anti-Terrorism Analytical Group and a founding member of Temple Beth El in Chappaqua, according to online reports.
Rather than go to trial in the bank fraud case, Schack took a deal from the government. He pleaded guilty to a single count of bank fraud conspiracy in exchange for leniency at a scheduled June 22 sentencing.
It wasn’t immediately known whether a “cooperating agreement” to testify against Hijjar was part of the pact.
Honig credited special agents of the FBI and IRS-Criminal Investigation with the investigation leading to Schack's plea, secured by Assistant U.S. Attorneys Andrew Macurdy and Shawn Barnes of her Criminal Division.
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