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Homeowners facing foreclosure in Bergenfield, Paterson and elsewhere were approached by the pair, who offered a way to keep their houses — and even restore their credit, the bureau said. The would-be angels completed their devilish scheme by conning buyers with good credit into applying for mortgages on the homes in exchange for a fee.
After the lenders wrote the business, the crooks paid the necessary fees at closing — and walked off with about $1.5 million, the FBI said, in a criminal complaint on file in U.S. District Court in Newark.
Operating in New Jersey and New York, Garth Celestine, 44, and Phil A. Simon, 34, finagled more than $10 million in worthless loans from the lenders while pocketing 15 percent from five properties, FBI Special Agent In Charge Weysan Dun said.
Agents arrested both at their Brooklyn home this morning on federal charges of attempting and conspiracing to commit wire fraud. They are being held pending court appearances this afternoon and will be prosecuted by Assistant U.S. Attorney Donna Gallucio in Newark.
But that’s apparently just a start.
“It is well known that the collapse of our housing market was a significant contributor to the dire economic circumstances our nation is facing,” Dun said. “Let me make this crystal clear: Anyone engaged in any type of mortgage fraud scheme will most definitely be investigated, caught, and prosecuted to the fullest extent of the law.”
Calling themselves “Home Savers Consulting Corporation,” Celestine and Simon scammed three different sets of victims, Dun said.
First were the homeowners, all of whom had substantial equity in their homes but were facing foreclosure because of an inability to make the monthly payments.
“Celestine and Simon would promise to help the homeowners keep their homes by avoiding foreclosure and repairing their damaged credit,” the FBI said.
“The homeowners would be required to allow the title of the homes to be put in the names of [third-party buyers] for one year –all with the promise of obtaining more favorable mortgages on those homes and having the title returned to them at the end.”
“Any equity withdrawn from their homes would be kept in escrow and used to pay the mortgages and expenses on those homes, as well as to repair the original owners’ credit,” the bureau said the homeowners were told.
Also victimized were the straw purchasers, whom Celestine and Simon recruited by saying they were helping the true owners “save” their homes, according to the criminal complaint.
The pair gave each $10,000 per property for participating, the complaint says.
Lastly, of course, were the mortgage lenders, who received applications in the straw buyers’ names that contained phony personal and financial information, the FBI said. Based on the applications, the lenders OK’d the loans — sometimes even approving multiple mortgages on the same properties.
The complaint says Celestine and Simon attended each loan closing and controlled the payout of the loan proceeds.
“Once all the homeowner’s debts and other fees were paid off, the remainder of the loan proceeds was deposited in one or more of three different company accounts owned and controlled by Celestine and Simon,” the FBI said.
“However, Celestine and Simon kept every penny for themselves.”
When the pair failed to make the mortgage payments, the loans defaulted — and innocent people lost their homes.
Dun, the FBI’s Special Agent in Charge, cautioned any potential victims to be wary of such offers.
For instance, he said, although the pair came off as experts, Simon actually cuts hair at a salon on Washington Avenue in Brooklyn.
“This is an example as to why the public should research the credentials of anyone with whom they intend to do business in the mortgage and real estate industry,” Dun said.
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