The former owner of a now defunct New Jersey mortgage company and his brother have found themselves in the middle of a fraud case federal prosecutors have described as a “land-flipping scheme” orchestrated by a closing attorney.
The U.S. Attorney’s office in Trenton said in a statement that attorney Allen J. Meyer, 58, of Monmouth County, defrauded the government out of more than $500,000. He used dozens of falsified mortgage loan applications and other documents on behalf of unqualified buyers to qualify for federally-insured mortgage insurance.
Meyer has admitted to his role in the scheme and pled guilty to one count of conspiracy to make false statements, according to the government. U.S. District Judge Anne E. Thompson sentenced Meyer to a year in federal prison and ordered him to pay restitution of $566,338 to the federal government.
Meyer was serving as a closing attorney for Mortgage Acceptance Corp. of Long Island, N.Y., which has since closed. He was trying to manipulate a mortgage loan insurance program administered by the U.S. Department of Housing and Urban Development (HUD) that is designed to assist low and moderate income borrowers by lowering the cost of mortgage loans. It is also set up to protect lenders by guaranteeing payment by the federal government if the borrowers default on their loans.
But the statement said Meyer and others involved in the scheme engaged in fraudulent “land-flips” in which a home is purchased by unqualified and ineligible “straw buyers.”
Those buyers, Kirsch said, “had no genuine interest in owning or occupying the properties” but let Meyer and his crew use their names to appear as the purchasers on loan documents.
“Meyer admitted that his co-conspirators then quickly ‘flipped’, or resold, the properties at inflated prices to third-parties who had obtained mortgage loans insured through HUD,” prosecutors said.
The phony transactions involved homes in low income areas of several New Jersey communities, including Asbury Park, Neptune, Long Branch and Lakewood, prosecutors said.
Meyer’s coconspirators were not named by prosecutors but they are being pursued by authorities.
The Asbury Park Press reported that Mortgage Acceptance was headed by Barry Fauntleroy. Asbury’s investigation reportedly found that Fauntleroy’s brother, Thomas Fauntleroy, and his associates bought at least 58 houses in poorer sections between October 1996 and March 1998, “selling them quickly at inflated prices to first-time buyers and using loans approved by the mortgage company.”
“The investigation relating to others involved in the conspiracy remains active and ongoing,” prosecutors said.
Investigators at HUD are working with the FBI and the U.S. Attorney’s office on the probe.
