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Scammer in $7M property flip gets more than 4 years in fed pen

Another conspirator in a $7 million North Jersey property-flipping scheme was sent to federal prison today: A federal judge in Newark sentenced former loan officer Frank Corallo, 37, of Maywood, to 51 months and ordered him to pay more than $1 million in restitution.

Photo Credit: Cliffview Pilot

This comes barely a week after 66-year-old Michael Eliasof, formerly of Mahwah, was sent away for 40 months.

Corallo is among a dozen people who have admitted their roles in the scheme and are either serving or will serve time for “flipping” somewhere around 50 properties. Under federal guidelines, he will serve more than four years behind bars, followed by three years of supervised release, in addition to the restitution payment.

U.S. District Judge Jose L. Linares has sentenced most of crew — including another Bergen County loan officer, Gerald Carti, 64, of Oakland, who got 27 months and was ordered to pay $1.03 million in restitution as part of his guilty plea to wire fraud and money laundering.

Co-defendants Frederick Ugwu and Amer Mir, a former loan officer of United Home Mortgage Co., took their chances with a jury and were convicted after a five-week trial in December 2009.

Carti helped Eliasof obtain mortgage loans for various borrowers to purchase two- and three-family homes in Paterson, knowing that the borrowers would be putting no money down to purchase the properties, according to court testimony.

Carti allowed the borrowers to submit loan applications to U.S. Mortgage, falsely stating that they had made substantial down payments, and had U.S. Mortgage fund the loans, even though the borrowers hadn’t made any down payments.

Carti got 50 percent of the fees that U.S. Mortgage received for each loan as commissions. When the loans began defaulting, Carti helped arrange their repayment through new fraudulent loans, many of which were originated by Mir, witnesses testified.

Corallo, meanwhile, brokered new, fraudulent subprime loans to pay off the previous bogus loans obtained by U.S. Mortage, while kicking in additional cash to help make up the difference, the government said.

By falsifying documents, including loan applications, the defendants got borrowers “to apply and obtain loans on properties that they did not own,” the government said. They also failed to record deeds with the county clerk’s office.

When the loans were approved, the money was deposited into trust accounts. Two attorneys — apparently un-indicted co-conspirators — then split the proceeds with Corallo and others, a complaint filed in U.S. District Court in Newark says.

Corallo has been in custody since his October 21, 2010, arrest on a conspiracy to commit wire fraud charge in an unrelated mortgage fraud case. That charge is still pending.

U.S. Attorney Paul J. Fishman noted that the case was brought “in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes.

“The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources,” Fishman said.

“The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes,” he added.

The case is part of an ongoing investigation by the U.S. Department of Housing and Urban Development Office of Inspector General (HUD-OIG), the FBI, the U.S. Postal Inspection Service and IRS-Criminal Investigation into fraudulent Federal Housing Administration-insured and conventional mortgage loans originated by various New Jersey mortgage companies. The investigation has resulted in more than a dozen guilty pleas from current or former New Jersey residents.

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