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Mortgage Fraud Task Force: Largest Indictment in US From Cleveland and Eastern Suburbs

Wednesday, August 26, 2009 at 5:29 PM

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Law enforcement officials from across Northeast Ohio yesterday announced what they are calling the largest mortgage fraud indictment in the country. The indictment charges 57 defendants for fraudulently flipping hundreds of houses in nearly two dozen Greater Cleveland communities. ideastream®'s Mhari Saito reports.

The massive indictment charges 36-year-old Uri Gofman with running a mortgage fraud ring through his company, Real Asset Fund.  Law enforcement officials say Gofman got several million dollars of seed money from a Latvian bank account. The indictment says family and friends used that cash to buy cheap houses - usually in foreclosure. Next, they refinanced them with fake and inflated loans.  Then, Cuyahoga County Prosecutor Bill Mason says, Gofman and his associates sold the houses off to investors.

Bill Mason: Gofman’s business was a scam from the beginning and it was a lucrative one. The codefendants shared about 31 million dollars or $60,000 for each real estate transaction.

Only one of the companies listed in the indictment is still operating. Tony Viola heads Realty Corporation of America. He says his company is not connected with Gofman.

Tony Viola: We do not have anything to do with mortgage loans. It’s not our fault if some bank or some loan officer did a crooked transaction. And we are completely innocent and we are going to trial with this case and we are going to win because we didn’t do anything wrong.

Nearly all of the 500 real estate transactions listed in the indictment occurred on Cleveland’s east side and in its eastern suburbs.  David Dickey lives on a Cleveland Heights street where Gofman and his associates flipped five homes. The one across from Dickey’s house has been an eyesore for years.

David Dickey: It hurts. It lessens the property value. It doesn’t attract very many qualified buyers. When they see homes vacant it sends a lot of negative messages.

The mayor of Cleveland Heights estimates that nearly ten percent of the city’s foreclosures resulted from sales done by Gofman and his associates. Mhari Saito, 90.3.

Tags

Economy, Facing the Mortgage Crisis

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