Ohio authorities announced indictments of 41 people and four companies accused of engaging in fraudulent transactions on the purchase of 453 Cleveland-area homes involving loans totaling $44 million.
In what was described as one of the nation’s largest mortgage fraud cases, Uri Gofman and 10 other defendants were indicted on mortgage fraud-related offenses including engaging in a pattern of corrupt activity, a first-degree felony. The other 34 individuals and companies were indicted on mortgage fraud-related offenses, prosecutors said.
Gofman allegedly recruited family, friends and others to invest in his real estate company, Real Asset Fund, started with seed money from an investor who transferred funds from a bank in Latvia, prosecutors said.
The scheme involved straw buyers, false claims of home improvements in conjunction with refinancings, and the subsequent sale of houses to unqualified buyers with the assistance of real estate agents, mortgage brokers and title companies, prosecutors said.
Lenders were allegedly led to believe that buyers, who claimed assets they did not have, were making at least a 10 percent down payment on properties whose claimed value exceeded their actual worth.
The defendants are accused of siphoning off more than $31 million in profits from the scheme, which left 358 homes in foreclosure, Ohio Attorney General Richard Cordray and Cuyahoga County Prosecutor Bill Mason said in a press release.
Five of the defendants in the case were previously charged with mortgage fraud-related offenses in federal court — Gofman, Paul Lesniak, Gennadiy Simkhovich, David Pirichy and Howard Sieferd Jr.
A Cuyahoga County Mortgage Fraud Task Force formed in December 2007 has indicted a total of 289 defendants for approximately $111 million in fraudulent loans on 812 houses, of which 616 fell into foreclosure, prosecutors said.
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