NEW JERSEY – Three New Jersey residents have been indicted in connection to a multimillion-dollar mortgage fraud scheme – two of the three indicted for fraudulently obtaining approximately $3 million of federal Economic Injury Disaster Loans, state officials said.
Arthur Spitzer, 37, of Toms River, was charged with eight counts of wire fraud, one count of bank fraud, one count of bank and wire fraud conspiracy, two counts of aggravated identity theft, one count of making a false statement to a financial institution, and 12 counts of money laundering.
Mendel Deutsch, 38, of Toms River, was charged with three counts of wire fraud, one count of bank fraud, one count of bank and wire fraud conspiracy, one count of aggravated identity theft, one count of making a false statement to a financial institution, and two counts of money laundering.
Joshua Feldberger, 42, of Howell, was charged with one count of wire fraud, one count of bank fraud, one count of bank and wire fraud conspiracy, one count of aggravated identity theft, and one count of making a false statement to a financial institution.
In 2019 and 2020, Spitzer orchestrated a scheme to defraud property owners and mortgage lenders by obtaining mortgage loans for real estate properties that he did not own, according to officials. Properties in New Jersey and Brooklyn, New York, had either no mortgages or mortgages in amounts significantly lower than the property’s market value.
Spitzer obtained mortgage loans by misrepresenting that he had the authority to obtain mortgage loans secured by properties he did not own. He used fake documents purporting to transfer control to him, which contained forged signatures of the true property owners, officials said.
“The mortgage loan proceeds were disbursed to bank accounts controlled by Spitzer or were used to otherwise benefit Spitzer, such as to pay off his debts. Spitzer then caused the mortgage loans to default by not making the required payments, leaving the true property owners subject to foreclosure and eviction,” officials said.
In June 2020, Spitzer conspired with Deutsch and Feldberger to make it appear as if Spitzer owned three properties in Brooklyn, and agreed to sell them to Deutsch, who obtained a $4 million mortgage loan in connection with the transaction. Feldberger facilitated the fake transaction as the owner of the settlement company that handled the transaction.
The defendants then created and sent letters stating that Deutsch had deposited significant funds into escrow toward the transaction, when in reality he had not.
“They created fake documentation purportedly transferring control of the properties to Spitzer; they failed to disclose a short-term loan obtained shortly before the transaction’s closing; and they lied to the mortgage lender by stating that the settlement company had received more than $2 million from Deutsch at closing, which led the mortgage lender to fund the loan. The defendants then used the mortgage loan proceeds to fund Deutsch’s down payment, which he had supposedly already provided,” officials said.
In addition, Spitzer and Deutsch each fraudulently obtained millions of dollars of government loans that were for small business distressed from the pandemic – the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The CARES Act authorized the U.S. Small Business Administration (SBA) to provide Economic Injury Disaster Loans (EIDLs) of up to $2 million to eligible small businesses that were experiencing substantial financial disruption due to the COVID-19 pandemic.
Spitzer and Deutsch obtained EIDL loans for businesses that had little or no operations. They submitted loan applications with false statements about the companies’ number of employees, revenues, cost of goods sold, or lost rents.
The counts of bank fraud conspiracy, bank fraud, and making a false statement to a financial institution, are each punishable by a maximum of 30 years in prison and a $1 million fine. The counts of wire fraud conspiracy and wire fraud are each punishable by a maximum of 20 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. The counts of money laundering are each punishable by a maximum of 10 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. The counts of aggravated identity theft carry a mandatory two-year prison sentence.
U.S. Attorney Philip R. Sellinger credited special agents of the FBI, Atlantic City Resident Agency, under the direction of Special Agent in Charge James E. Dennehy in Newark; special agents of IRS – Criminal Investigation, under the direction of Special Agent in Charge Jenifer L. Piovesan in Newark; and special agents of the Federal Deposit Insurance Corporation – Office of Inspector General, under the direction of Patricia Tarasca, Special Agent-in-Charge, New York Regional Office, with the investigation leading to the charges.
The charges and allegations contained in the charging instrument are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
