Michael J. Garcia, U.S. Attorney for the Southern District of New York, charged 26 people with fraudulently acquiring over 1,000 home mortgages and home equity loans totaling at least $200 million. The charges came after an exhaustive joint investigation by the FBI, New York Police Department, and the U.S. Immigration and Customs Enforcement (ICE).
According to Garcia's office, the applications, which were submitted from 2004 through December 2006, induced "the lenders to make loans that otherwise would not have been funded."
Among the properties alleged to have been bought using the loans is a block of ten rent-regulated apartments on Manhattan's Upper West Side Side.
Certain defendants may have garnered millions of dollars in loan proceeds by omitting from their loan applications information such as their income, the fair market value of the apartments, and the fact the apartments were subject to New York's rent regulation laws, the indictment states.
Also charged were three mortgage brokers - including Galina Zhigun, the owner of mortgage brokerage AGA Capital NY, Inc. - who are accused of processing the fraudulent loan applications.
AGA Capital - later succeeded by Lending Universe Corporation - and Northside Capital, another lender which processed the loans, initially earned a total of at least $4 million in commissions and fees from the transactions.
However, as a result of the fraud, the companies have now each suffered at least $4.5 million in losses.
If convicted, each defendant could face a sentence of at least 30 years in jail and a maximum fine of $250,000. Pre-trial hearings are set to begin on Oct. 17.