10 accused of mortgage fraud scheme

From Bloomberg News

Ten men were charged with defrauding more than a dozen mortgage lenders, including Lehman Bros. Holdings Inc., HSBC Holdings and Fremont General Corp., in a scheme prosecutors said used buyers with fake identifies.

The leaders got loans through a mortgage brokerage they ran, authorities said in a warrant unsealed Wednesday in federal court in New York. They created false identities and credit ratings for “straw buyers” who bought and resold properties, getting new mortgages each time, prosecutors said.

Names and Social Security numbers were supplied by immigrants, mainly from Bangladesh, to create buyers’ identities, Joseph Moriarty of the FBI said in an affidavit. The men stole an estimated $7 million, an FBI spokesman said.


Principals of the Queens, N.Y., brokerage, called New Generation Funding, opened credit card accounts and built credit ratings for the straw buyers, the government said. The men then submitted mortgage applications with fraudulent employment and income information, prosecutors said.

The straw buyers, using multiple identities, were allegedly paid about $5,000 per transaction.

Santa Monica-based Fremont, New York-based Lehman Bros. and London-based HSBC declined to comment.