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Arthur Spitzer, 37, was indicted on 25 counts, New Jersey's U.S. Attorney Philip Sellinger said in a news release on Tuesday, Sept. 3. A grand jury also indicted 38-year-old Mendel Deutsch of Toms River and 42-year-old Joshua Feldberger of Howell Township in the case.
According to the indictment, Spitzer got mortgage loans for real estate properties that he didn't own in New Jersey and Brooklyn, New York. He chose properties that had no mortgages or ones significantly below market value.
Spitzer received the loans six times by lying that he had the authority to obtain them despite not owning the properties. Prosecutors said he used documents with forged signatures of property owners, fraudulently transferring control to him.
The mortgage loans were deposited into Spitzer's bank accounts and he used the money to pay off his debts.
"Spitzer then caused the mortgage loans to default by not making the required payments, leaving the true property owners subject to foreclosure and eviction," Sellinger said.
Spitzer was accused of conspiring with Deutsch and Feldberger in June 2020 to make it look like Spitzer owned three properties in Brooklyn. Spitzer had agreed to sell them to Deutsch, who got a $4 million mortgage loan for the transaction.
According to prosecutors, Feldberger owned the settlement company that handled the fraudulent transaction.
"The defendants created and sent letters stating that Deutsch had deposited significant funds into escrow toward the transaction, when in reality he had not," Sellinger said. "They created fake documentation purportedly transferring control of the properties to Spitzer."
The three were also accused of not disclosing a short-term loan obtained just before the transaction closed. They also lied to the mortgage lender by saying the settlement company received more than $2 million from Deutsch.
The lender paid out the loan and the three used the money to pay Deutsch's down payment, which they claimed was already paid.
Spitzer and Deutsch also fraudulently received about $3 million in federal Economic Injury Disaster Loans (EIDL) in 2020 and 2021, the indictment said. The money was part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was intended to boost small businesses hurt by the COVID-19 pandemic.
Businesses could receive up to $2 million from EIDLs and they were required to submit information like their number of employees, revenues, and expenses.
"Spitzer and Deutsch obtained EIDL loans for businesses that had little or no operations by submitting loan applications that included false statements about the applicant companies’ number of employees, revenues, cost of goods sold, or lost rents," said Sellinger.
Spitzer was charged with 12 counts of money laundering, eight counts of wire fraud, two counts of aggravated identity theft, bank fraud, bank and wire fraud conspiracy, and making a false statement to a financial institution.
Deutsch was charged with three counts of wire fraud, two counts of money laundering, bank fraud, bank and wire fraud conspiracy, aggravated identity theft, and making a false statement to a financial institution. Feldberger was charged with wire fraud, bank fraud, bank and wire fraud conspiracy, aggravated identity theft, and making a false statement to a financial institution.
If convicted, the three face up to 30 years in prison and a $1 million fine.
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