Five men — including two from Queens — were arrested for their alleged roles in a mortgage fraud scheme that swindled loan holders out of millions of dollars, prosecutors announced Tuesday.
The U.S. Attorney’s office for the Eastern District of New York identified the five as Michael Konstantinovskiy, 33, of Rego Park; Avraham Tarshish, 40, of Queens Village; Michael Herskowitz, 40, of Brooklyn; Tomer Dafna, 48, of Great Neck; and Iskyo Aronov, 32, of Miami, Florida.
They were charged with conspiracy to commit wire fraud and bank fraud, and related wire fraud counts, in connection with a scheme to defraud mortgage lenders, according to U.S. Attorney Richard Donoghue.
“As alleged, the defendants defrauded mortgage loan holders out of millions of dollars, with taxpayers saddled with much of the loss,” Donoghue said. “This office will continue working with our law enforcement partners to vigorously prosecute those who commit mortgage fraud and enrich themselves at the expense of the financial institutions and government programs that insure or guarantee the loans.”
According to charges, between December 2012 and January 2019, the defendants allegedly conspired to defraud mortgage lenders by misleading them into approving short sale transactions at fraudulently depressed prices.
During a short sale, a mortgage loan borrower sells his or her property for less than the outstanding balance of the mortgage loan with approval from the lender. Proceeds from the short sale would go to cover the outstanding mortgage loan balance owed to the lender, who typically agrees to forgive the borrower’s remaining mortgage loan balance.
In this case, the defendants allegedly manipulated the process for the short sales by transferring properties for prices well above the short sale prices, and failing to disclose this to the mortgage lenders and servicers. The defendants also allegedly took steps to preclude other prospective purchasers from making higher offers for properties by failing to market properties as required by the lenders, as well as filing fraudulent liens on properties.
The defendants allegedly provided the mortgage lenders with fake information in transaction documents and also failed to disclose either payments made to the borrower and others, whether it was related to short sale or existing agreements to transfer the properties at inflated prices. Many of the affected mortgage loans were insured by the Federal Housing Administration, or owned or guaranteed by Fannie Mae or Freddie Mac.
Konstantinovskiy, Dafna, Tarshish and Herskowitz were arrested on Sept. 10 in New York, and will be arraigned this afternoon before United States Magistrate Judge Lois Bloom. Aronov was arrested in Florida, and will appear this afternoon for a removal hearing at the federal courthouse in Miami. If convicted, each defendant faces up to 30 years in prison and a $1 million fine.
“Together with our partners in law enforcement, we have disrupted a scheme to defraud Fannie Mae and Freddie Mac. As demonstrated by this indictment, FHFA-OIG will investigate and hold accountable those who seek to victimize the government-sponsored entities supervised and regulated by FHFA,” stated FHFA-OIG Special Agent-in-Charge Robert Manchak.