Somerset County men plead guilty in $3.5 million mortgage fraud scheme




  • In US
  • 2022-11-29 10:15:04Z
  • By Courier News
 

TRENTON - Two men, one from Watchung and the other from Long Hill, have pleaded guilty in federal court to conspiring to commit a mortgage fraud scheme that led to more than $3.5 million in losses.

Victor Santos, also known as Vitor Santos, 63, of Watchung, and Fausto Simoes, 69, of Long Hill, pleaded guilty by videoconference to conspiracy to commit bank fraud before U.S. District Judge Michael A. Shipp.

From September 2007 through November 2008, Santos, a real estate developer, and Simoes, an attorney, conspired with each other and others to fraudulently obtain mortgage loans with a total value of more than $4 million, court documents say.

Santos orchestrated the scheme to recruit fake, or "straw" buyers to purchase 12 properties in Newark. Using the identity and credit of these straw buyers allowed Santos, Simoes and their conspirators to conceal their identities from the lender as the actual purchasers of the properties, court papers say.

Santos and others induced people to be the straw buyers by agreeing to pay each at least $5,000, secure tenants to lease the purchased properties and cover costs associated with the property, including fees associated with the real estate purchases and the mortgage payments. Santos, Simoes and others also conspired to submit fraudulent and false loan applications and documents to the mortgage lender.

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Simoes conducted the closings of 10 of the fraudulent transactions and helped perpetuate the fraud by falsely reporting that the straw buyers were providing the cash required at closing when, in fact, Simoes received those funds from a shell company controlled by Santos and another conspirator

For several transactions, Simoes also failed to disclose to the lender that the shell company controlled by Santos and another conspirator would receive a substantial payout from the loan proceeds.

Shortly after the properties were acquired, Santos and his conspirators broke their promises to pay the mortgages. The straw buyers, in whose names the mortgages were obtained and thus were responsible for the payments, did not have enough money to pay the fraudulently obtained mortgages and defaulted, which caused the lender, Fannie Mae, and insurers to lose more than $3.5 million.

Sentencing for Santos is scheduled for April 12, 2023, and for Simoes, April 13, 2023. The charge carries a maximum prison sentence of 30 years and a $1 million fine.

Two other conspirators previously pleaded guilty and are awaiting sentencing.

Email: mdeak@mycentraljersey.com

Mike Deak is a reporter for mycentraljersey.com. To get unlimited access to his articles on Somerset and Hunterdon counties, please subscribe or activate your digital account.

This article originally appeared on MyCentralJersey.com: NJ men plead guilty to $3.5M mortgage fraud scheme

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