Three New Jersey licensed attorneys and a New Jersey licensed Realtor were indicted for their roles in a short sale fraud scheme.
Lawyers Bruce Egert, 69, of Tenafly, N.J.; Nelson Kong, 44, of Bethpage, N.Y.; Seung Han Shin, aka Aaron Shin, 42, of Old Tappan, N.J.; and Realtor Francisco Sanchez, 48, of Ridgefield Park, N.J., were each indicted by a federal grand jury with one count of conspiracy to commit bank fraud and three counts of bank fraud. Egert and Kong were also charged with three counts of false statements to a financial institution.
Shin and Kong were arraigned on Sept. 19, before U.S. Magistrate Judge Michael Hammer in Newark federal court. Egert and Sanchez were arraigned on Sept. 23, before U.S. Magistrate Judge Stacey Adams in Newark federal court. Each of the defendants was released on $100,000 unsecured bond.
According to documents filed in this case, from June 2013 through December 2016, Egert, Kong, Shin, Sanchez, and others fraudulently induced mortgage lenders to participate in short sale transactions. Through fraudulent misrepresentations and false statements, Mehdi Kassai, with the help of his conspirators, purchased homes at significant discounts from the note-holding banks both in his name and using stolen identities. Kassai, Egert, Kong, Shin, and Sanchez failed to reveal to the banks that Kassai and Egert had already arranged to flip the homes to other buyers at much higher prices, and that the homes were flipped in violation of deed restrictions regarding the time before which a resale could occur and the maximum resale price. Some of the properties purchased were resold at a substantial profit the same day the short sale closed.
Steve Kang and Joshua Son were Realtors who represented short sale sellers whose homes were sold to Kassai. In return for their involvement in the scheme, Kassai shared with them portions of the profits of the resales. Egert was Kassai’s attorney who represented him in the short sales, and, among other things, conspired with Kassai to use stolen identities to purchase short sale properties and submitted or caused to be submitted fraudulent HUD-1 Settlement Statements to the victim banks. Kassai recruited Kong to represent certain sellers, and, among other things, Kong drafted agreements.
Shin was a bankruptcy attorney Kassai paid to file bankruptcy petitions on behalf of short sale sellers to forestall imminent foreclosures on the properties. Shin failed to disclose that Kassai, the short sale buyer, was involved in these transactions. Sanchez was a Realtor Kassai paid to assist in the management and control of the short sale process. If Kassai attempted to buy a short sale property in his own name and was rejected, Sanchez assisted Kassai with finding a straw buyer to acquire the short sale property.
Kassai pleaded guilty on Dec. 18, 2018, to an information charging him with two counts of bank fraud , wire fraud affecting a financial institution and money laundering. He was sentenced by U.S. District Judge William Martini to 16 months in prison, three years of supervised release, and ordered to pay $7.94 million in restitution for 32 illicit transactions.
Kang pleaded guilty on May 30, 2019, to an information charging him with bank fraud and wire fraud affecting a financial institution. He was sentenced by U.S. District Judge Claire Cecchi to time served and ordered to pay $2.38 million in restitution.
Son pleaded guilty on May 30, 2019, to an information charging him with bank fraud and wire fraud affecting a financial institution. He was sentenced by Martini to time served, two years of supervised release, and ordered to pay $2.38 million in restitution.
Conspiracy to commit bank fraud, bank fraud, and false statements to a financial institution each carry a maximum potential penalty of 30 years in prison and a fine of $1 million, or twice the gross gain or loss from the offense, whichever is greatest.
U.S. Attorney Philip Sellinger credited special agents of the Federal Housing Finance Agency (FHFA), Office of Inspector General, under the direction of Acting Special Agent in Charge Robert Manchak; special agents of Homeland Security Investigations Newark, under the direction of Acting Special Agent in Charge Spiros Karabinas; and special against of the Social Security Administration, Office of the Inspector General, Boston / New York Field Division under the direction of Special Agent in Charge Amy Connelly, with the investigation.
The government is represented by Assistant U.S. Attorney Shontae Gray of the Economic Crimes Unit in Newark, and Special Assistant U.S. Attorney Kevin DiGregory of the FHFA, Office of Inspector General.