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March 16, 2011

DA Rice’s Real Estate Unit Takes Down Largest Mortgage Fraud & I.D. Theft Scheme in Nassau County History

‘Sweet Deal’ real estate group stole more than $20M from banks, individuals and the Nassau County government

MINEOLA, N.Y. – Nassau County District Attorney Kathleen Rice today announced that after a two-year investigation, her office has filed four indictments charging 17 people with more than 108 crimes for their roles in mortgage fraud and identity theft schemes that stole more than $20 million from homeowners, banks, and the County government.

The New York State Banking Department offered significant investigative assistance.

The scheme was uncovered by the office’s Crimes Against Real Estate Unit, which Rice formed during the national economic and housing crisis in 2009. The indictment represents the largest takedown of mortgage fraud in Nassau County history. Fourteen of the 17 defendants are charged with Enterprise Corruption under New York's Organized Crime Control Act (OCCA)*, and related crimes, including grand larceny, scheme to defraud, and falsification of business records.

Rice said that her office’s investigation, dubbed “Operation: Sweet Deal,” uncovered more than 45 independent acts of fraud. The ringleaders, James Robert Sweet, 43, of Westbury, Dwayne Benjamin, 44, of Westbury, and their numerous co-conspirators, face charges ranging from enterprise corruption and first-degree grand larceny to money laundering, identity theft and conspiracy. (See attached documented for defendant names and formal charges.)

Among those arrested are lawyers, mortgage brokers, real estate brokers, bank employees, an appraiser, a financial consultant and one United States Postal worker.

Rice said that Sweet Deal has operated in Nassau County for nearly six years under the leadership of Sweet and Benjamin.

Initially, the scammers used straw buyers who were convinced by Sweet and his members to purchase properties in Nassau County, using their own personal information. Sweet told some of the straw buyers that they would be assisting sellers who were trying to sell their homes from foreclosure and/or that the homes would be a good investment opportunity. But the straw buyers were actually assisting in helping the Sweet Deal members to successfully perform their mortgage fraud schemes. Sweet Deal would typically pay their straw buyers $10,000 for the use of their name and personal information.

Members of Sweet Deal identified homes which were either already for sale or in distress. The key to the scam was that, unlike in a normal home purchase, Sweet Deal negotiated with the sellers to purchase the properties at a higher price than the seller was asking. As part of the deal, Sweet Deal arranged to keep the difference between the total amount lent by the bank and what the seller wanted as profit.

The scam worked because Sweet Deal never intended to make any payments on the properties; they only intended to walk away with the profit. Most of the homes ended up in foreclosure.

In one case, Sweet Deal actually purchased the same house twice in a two-week period. On November 28, 2005, a Sweet Deal straw buyer took out a $390,000 mortgage to pay for a West Hempstead home. Sweet Deal members then took advantage of a delay in the filing of paperwork in the Nassau County Clerk’s Office, quickly “purchasing” the home again through a different straw buyer with a second $390,000 mortgage on December 16, 2005, while the official paperwork still listed the home’s original owner.

By doing this, Sweet Deal members were able to take out two $390,000 mortgages, using the cash from the first to pay off the original owners’ outstanding mortgage, and keeping the entirety of the second. After closing costs, Sweet Deal members walked away with more than $361,000. The house eventually went into foreclosure.

Soon, however, the group began to branch out into more lucrative thefts by recruiting friends, family members, and co-workers to steal the identities of home buyers and property owners and to impersonate them at the closings.

Rice said that using these stolen identities, Sweet Deal members could impersonate both the home buyer and seller, and keep all of the proceeds of the phony home sale. In other words, using a stolen identity, Sweet Deal imperators would secure a real mortgage. At the closing, another Sweet Deal member would act as the home owner, using a stolen identity of the real home owner.

Once Sweet Deal members had stolen the mortgage proceeds, they had no reason to keep making mortgage payments and they let the property fall into foreclosure.

Using this scheme, organization members were able to steal the entire proceeds of at least six home sales in the Westbury area.

In order to accomplish this, Sweet Deal recruited individuals to impersonate the seller and buyer, whose identities had been stolen. Sweet Deal also assigned a member of Sweet Deal to impersonate a paralegal and also stole an attorney’s identity to set up a bank account to launder money through.

Another scheme involved defrauding county government by renting some of the properties they had purchased through straw buyers before and during foreclosure proceedings. Some of the tenants qualified for low-income subsidies offered by Nassau County government programs. However, the programs would only issue the subsidy checks to the owners of record.

Since the properties were held in the straw buyers’ names, members of Sweet Deal would not be able to collect the rent. Therefore, in order to collect the subsidies, several members of Sweet Deal submitted fake deeds to the program, indicating that they owned the properties, and stole more than $80,000 in undeserved subsidies.

“The criminal activity by these mortgage fraud schemers has now been brought to a screeching halt,” said Rice. “Thanks to the meticulous and thorough work by prosecutors and investigators in my office we were able to pull down this $20 million house of cards. Mortgage fraud hurts every honest, hard-working citizen by making it more difficult for them to get good mortgage rates and destroys communities when houses fall into foreclosure and end up boarded-up or sold for less than their original value.”

“Sweet and his co-conspirators used their knowledge of the mortgage industry for their own financial gain at the expense of innocent consumers, financial institutions and the Nassau county government,” said Richard H. Neiman, Superintendent of Banks for New York State. “Through our Criminal Investigations Bureau, the Banking Department will continue to work with our law enforcement partners to ferret out these fraudulent schemes and bring unscrupulous individuals to justice.”

“Mortgage fraud and white collar crimes strike at the economic heart of the American system,” said Acting Inspector General Michael P. Stephens of the Unites States Department of Housing and Urban Development Office of the Inspector General. “To the extent that we can uncover and prosecute these activities, it's to everyone's benefit.Accordingly, I am happy to lend the HUD Office of Inspector General's nationwide expertise to this exceptional group of law enforcement agencies.”

Assistant District Attorney Abigail Margulies, Chief for the Crimes Against Real Estate Unit, and Assistant District Attorney Nasreen Syed, are handling the case for the District Attorney's Office.

Rice also thanked the New York State Banking Department, the Westchester and Kings County District Attorney’s Offices, the U.S. Postal investigators and the New York State Department of Motor Vehicles for their involvement in the investigation.

*The Organized Crime Control Act (OCCA), the New York State counterpart of the federal Racketeer-Influenced and Corrupt Organizations (RICO) statute, which permits prosecutors to deal with criminal groups on an enterprise-wide basis rather than pursue isolated instances of criminal conduct. Using this law also provides for potentially higher sentences to be imposed. This is the first time in Nassau County history that OCCA has been used to prosecute mortgage fraud.

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“OPERATION: SWEET DEAL” DEFENDANTS

The charges are merely accusations and the defendants are presumed innocent until and unless proven guilty

James Robert Sweet, 43, Westbury, is charged with OCCA, two counts of Grand Larceny in the First and Third Degrees, 32 counts of Grand Larceny in the Second Degree, Money Laundering in the First Degree, seven counts of Money Laundering in the Second Degree, eight counts of Money Laundering in the Third Degree, six counts of Money Laundering in the Fourth Degree, Scheme to Defraud in the First Degree, Conspiracy in the Fourth Degree, six counts of Identity Theft in the First Degree, and 30 counts of Falsifying Business Records in the First Degree. He faces up to 25 years in prison if convicted and is represented by Robert Del Grosso, Esq.

Dwayne Benjamin, 44, of Westbury, is charged with OCCA, two counts of Grand Larceny in the First and Third Degrees, 32 counts of Grand Larceny in the Second Degree, Grand Larceny in the Fourth Degree, Money Laundering in the First Degree, seven counts of Money Laundering in the Second Degree, eight counts of Money Laundering in the Third Degree, six counts of Money Laundering in the Fourth Degree, Scheme to Defraud in the First Degree, Conspiracy in the Fourth Degree, six counts of Identity Theft in the First Degree, 30 counts of Falsifying Business Records in the First Degree, and three counts of Offering a False Instrument for Filing. He faces up to 25 years in prison if convicted.

Stephanie Watkins, 36, Amityville (real estate broker), is charged with OCCA, 12 counts of Grand Larceny in the Second Degree, Conspiracy in the Fourth Degree, Money Laundering in the First Degree, six counts of Money Laundering in the Second Degree, Scheme to Defraud in the First Degree, six counts of Falsifying Business Records in the First Degree, and six counts of Identity Theft in the First Degree. She faces up to 25 years in prison if convicted and is represented by Richard Langone, Esq.

Sophia Welsh, 43, West Babylon (mortgage originator), is charged with OCCA, 12 counts of Grand Larceny in the Second Degree, Conspiracy in the Fourth Degree, Money Laundering in the First Degree, six counts of Money Laundering in the Second Degree, Scheme to Defraud in the First Degree, six counts of Falsifying Business Records in the First Degree, and six counts of Identity Theft in the First Degree. She faces up to 25 years in prison if convicted and is represented by Michelle Armstrong, Esq.

Alfred Gary, 44, Englewood, N.J. (high-end car dealer – laundered funds), is charged with OCCA, Conspiracy in the Fourth Degree, Scheme to Defraud in the First Degree, Money Laundering in the First Degree, five counts of Money Laundering in the Second Degree, and Falsifying Business Records in the First Degree. He faces up to 25 years in prison if convicted and is represented by Michael Premliser, Esq.

Vertus Vielot, 35, Baldwin (impersonated seller at ID thefts), is charged with OCCA, 12 counts of Grand Larceny in the Second Degree, Scheme to Defraud in the First Degree, and Conspiracy in the Fourth Degree. He faces up to 25 years in prison if convicted and is represented by Meredith Bettenhauser, Esq.

Yves Mathieu, 45, Elmont (provided fake docs for ID thefts), is charged with OCCA, four counts of Grand Larceny in the Second Degree, two counts of Falsifying Business Records in the First Degree, Scheme to Defraud in the First Degree, three counts of Offering a False Instrument for Filing, three counts of Grand Larceny in the Third Degree, and Conspiracy in the Fourth Degree. He faces up to 25 years in prison if convicted and is represented by David Epstein, Esq.

John DiCanio, 37, of Islip Terrace (mortgage originator), is charged with OCCA, four counts each of Grand Larceny in the Second Degree and Falsifying Business Records in the First Degree, Scheme to Defraud in the First Degree, and Conspiracy in the Fourth Degree. He faces up to 25 years in prison if convicted and is represented by Michael Finkelstein, Esq.

Carlos Irizarry, 34, of Long Beach (mortgage originator), is charged with OCCA, four counts each of Grand Larceny in the Second Degree and Falsifying Business Records in the First Degree, Scheme to Defraud in the First Degree, and Conspiracy in the Fourth Degree. He faces up to 25 years in prison if convicted and is represented by William Petrillo, Esq.

Larinzo Clayton, 45, of Westbury (attorney), is charged with OCCA, five counts of Grand Larceny in the Second Degree, four counts of Money Laundering in the Third Degree, Money Laundering in the Fourth Degree, Scheme to Defraud in the First Degree, and Conspiracy in the Fourth Degree. He faces up to 25 years in prison if convicted and is represented by David Smith, Esq.

Ethan Serlin, 40, of Dix Hills (attorney), is charged with OCCA, two counts of Grand Larceny in the First Degree, 12 counts of Grand Larceny in the Second Degree, Money Laundering in the Second Degree, four counts of Money Laundering in the Third Degree, five counts of Money Laundering in the Fourth Degree, Identity Theft in the First Degree, five counts of Falsifying Business Records in the First Degree, Scheme to Defraud in the First Degree, and Conspiracy in the Fourth Degree. He faces up to 25 years in prison if convicted and is represented by Joey Jackson, Esq.

Radamex Velasquez, 34, of Valley Stream (appraiser), is charged with OCCA, nine counts of Grand Larceny in the Second Degree, 10 counts of Falsifying Business Records, Scheme to Defraud in the First Degree, and Conspiracy in the Fourth Degree. He faces up to 25 years in prison if convicted and is represented by Robert Semensohn, Esq.

James Gant, 35, of Brooklyn (straw buyer), is charged with OCCA, four counts of Grand Larceny in the Second Degree, Scheme to Defraud in the First Degree, and Conspiracy in the Fourth Degree. He faces up to 25 years in prison if convicted and is represented by Steven Barnwell, Esq.

Allen Woods, 35, of Hempstead (straw buyer), is charged with OCCA, three counts of Grand Larceny in the Second Degree, two counts of Falsifying Business Records in the First Degree, Scheme to Defraud, and Conspiracy in the Fourth Degree. He faces up to 25 years in prison if convicted and is represented by Joshua Kahn, Esq.

Lyshaan Hall, 33, of Brooklyn (tax preparer – provided fake docs), is charged with two counts of Falsifying Business Records in the First Degree. He faces up to four years in prison if convicted and is represented by Steve Williams, Esq.

Sonia Panameno, 29, of Mineola (bank employee – provided fake docs), is charged with Falsifying Business Records in the First Degree. She faces up to four years in prison if convicted and is represented by Marc Gann, Esq.

Roxanna Calero, 33, of Brooklyn (bank employee – provided fake docs), is charged with Falsifying Business Records in the First Degree. She faces up to four years in prison if convicted and is represented by Emrah Artukmac, Esq.