NEWARK — They applied for mortgages using phony pay stubs showing wages never earned. They forged tax documents and bank statements. And they assumed the identities of people who had moved out of the country, hoping to use their clean credit records to trick bank officials.
Those were among the allegations federal prosecutors outlined Wednesday as they unveiled charges against 28 real estate agents, investors, accountants and others caught in a sweeping mortgage-fraud sting in northern New Jersey.
Authorities said the investigation provided a window into shadowy criminal enterprises in which the defendants acted like con artists to dupe banks into loaning hundreds of thousands of dollars to people who had no intention of paying it back.
"Mortgage fraud is not limited to people who steal millions at a time. It is more insidious. It is more pernicious. And it is more prevalent," U.S. Attorney Paul J. Fishman said.
The investigation targeted a string of separate schemes involving more than 17 properties in New Jersey. But the defendants didn’t really want the property; they wanted the money, authorities said. In total, the defendants tried to bilk more than $5.5 million from lending institutions.
Most of those loans never transpired. Unbeknownst to the defendants, many were working with a loan officer who was secretly cooperating with investigators, authorities said. The total loss to banks was less than $1 million, Fishman said.
After months of investigating, more than 160 agents from the FBI, IRS, Secret Service and other law-enforcement agencies fanned out across the state shortly after dawn Wednesday and arrested 23 of the defendants. One was already in custody. Another has agreed to surrender. Three remained at large Wednesday night.
They were led shackled into FBI headquarters in Newark, then loaded onto a bus bound for federal court. They appeared for brief hearings. Some were translated into Portuguese for defendants, several of whom are from Brazil. At least five were released on bond. Others were ordered detained after prosecutors said their immigration status made them a flight risk. They are charged with conspiring to commit wire fraud and bank fraud. If convicted, they face up to 30 years in prison.
Authorities said the separate schemes followed a familiar pattern. Working in small groups, the defendants identified properties on the market, found people to pose as straw buyers and then tried to trick banks into giving them loans.
In some cases, they gave the straw buyers forged documents inflating their incomes and assets. One of the defendants, Viviane Bernardim, a 33-year-old mortgage consultant from Aberdeen, offered to sell the informant a Social Security card, W-2s, tax returns and a copy of a drivers license that would enable them to assume the identity of someone who had moved out of the country, authorities said. The price was $15,000, authorities said.
Several of defendants allegedly used "document makers" who manufactured fake tax returns, bank statements, pay stubs and other records. One of alleged "document makers," Jairo Nunes, a 33-year-old Brazilian national who lives in Newark, was arrested March 9 and remains in custody.
But authorities say the fraud went beyond documents. In one case, authorities found several telephones in the home of a 31-year-old real estate agent from Kearny. Each receiver was labeled with the name of a fake company. Authorities say the woman, Lucilene Guido, gave the numbers to those phones to banks officials if they wanted to verify the nonexistent employment of straw buyers.
"For decades, home ownership has been the American dream, a way to establish roots in a community, build personal wealth, and secure a peaceful retirement," said Michael B. Ward, head of the FBI’s Newark office. "Mortgage fraud places this dream at risk."