Preet Bharara, the U.S. attorney for the Southern District of New York, announced that Gerard Canino, the president and owner of Long Island-based mortgage brokerage firm First Class Equities, pled guilty today to conspiring to commit wire fraud and bank fraud in connection with a $66 million mortgage fraud scheme. Canino pled guilty before U.S. District Judge Robert Patterson.
According to the indictment previously filed in Manhattan federal court, as well as statements made in public proceedings, Canino was the president and owner of First Class Equities, a mortgage brokerage firm with offices located in Oceanside and Old Westbury, N.Y.
From 2004 to 2009, Canino and his firm engaged in a massive mortgage fraud scheme that recruited “straw buyers” — individuals who posed as home buyers but had no intention of living in, or paying for, the mortgaged properties — to purchase homes from willing sellers, many of whom were in financial distress. Canino and his co-conspirators often paid the straw buyers for their participation in the scheme. At Canino’s direction, loan officers at First Class Equities submitted applications to banks and lenders on behalf of the straw buyers that made fraudulent representations about their net worth, employment, and income. They also fraudulently stated that the sham buyers planned to live in the properties for which the mortgage applications were made. After approving the loans, the lenders sent the mortgage proceeds to their attorneys, including several that were participants in the scheme. These attorneys submitted false statements to the lenders about how they were distributing the loan proceeds and then made huge illicit payments, typically totaling tens of thousands of dollars or more per transaction, from the loan proceeds to members of the conspiracy.
Canino, 51, of Merrick, N.Y., pled guilty to one count of conspiracy to commit wire fraud and bank fraud and faces a maximum sentence of 30 years in prison. Canino will be sentenced by Judge Patterson on Sept. 17, 2012.
Charges are still pending against Canino’s co-defendants, and they are presumed innocent unless and until proven guilty. Trial of the remaining defendants is scheduled to begin on July 2, 2012.
This matter is being handled by the Office’s Complex Frauds Unit. Assistant U.S. Attorneys Nicole Friedlander and Niketh Velamoor are in charge of the criminal case.