Man Admits $40.8M Mortgage Fraud Involving Crest Oceanfront Condos

CAMDEN — For the second time in a week, federal law enforcement officials issued releases regarding individuals implicated in alleged multi-million dollar mortgage frauds involving seashore real estate in Cape May County.
On Tue. July 19, the U.S. Attorney for the District of New Jersey Paul J. Fishman reported that a Lodi man, had admitted to conspiring to take part in a scheme that resulted in lenders releasing over $40.8 million , based upon fraudulent mortgage loan applications, and conspiring to launder proceeds of those actions.
On July 14, John C. Lucidi Jr., 31, of Las Vegas, Nev. was charged by information with conspiracy to commit wire fraud, wire fraud and money laundering in an alleged scheme that involved North Wildwood properties. See that story in the July 20 Herald print edition or elsewhere on the Herald website.
On July 19, Charles Harvath, 33, of Lodi, pleaded guilty to Information charging him with one count each of conspiracy to commit wire fraud and conspiracy to commit money laundering.
Harvath entered his guilty plea before U.S. District Judge Joseph E. Irenas in Camden federal court.
According to documents filed in the case and statements made during Harvath’s guilty plea proceeding:
Harvath and his co-conspirators located oceanfront condominiums overbuilt by financially distressed developers in Wildwood Crest; as well as premier real estate in vacation destinations in Georgia and South Carolina; and properties in New Jersey owned by financially distressed homeowners facing foreclosure.
They then recruited “straw” buyers to purchase those properties who had good credit scores, but lacked financial resources to qualify for mortgage loans.
Harvath and his co-conspirators created false documents including fake W-2 forms, income tax returns, investment statements, and rental agreements to make those “straw” buyers appear more creditworthy than they actually were in order to induce lenders to make the loans.
They also established numerous telephone lines for companies owned by some of the conspirators so that when a lender contacted the telephone number, the conspirators could falsely verify that a “straw” buyer was employed by the company listed on his or her fraudulent loan application.
Harvath also caused fraudulent mortgage loan applications in the name of the “straw” buyers and supporting documents to be submitted to mortgage lenders, which attributed to the “straw” buyers inflated income and assets.
Once the loans were approved and the mortgage lenders sent the loan proceeds in connection with real estate closings on the properties, Harvath had some of the funds wired or checks deposited into various accounts that he and his co-conspirators controlled.
The wire fraud conspiracy charge to which Harvath pleaded guilty carries a maximum potential penalty of 30 years in prison and a $1-million fine.
The money laundering conspiracy charge carries a maximum potential penalty of 10 years in prison and a $250,000 fine. In addition, Horvath agreed to forfeit $2,412,898.80, representing the proceeds of the fraud. Sentencing is currently scheduled for Oct. 25, 2011.
Fishman credited special agents of the FBI’s Atlantic City Resident Agency, under the direction of Special Agent in Charge Michael B. Ward in Newark; and IRS — Criminal Investigation in Mays Landing, under the direction of Special Agent in Charge Victor W. Lessoff, with the continuing investigation leading to the guilty plea.
The government is represented by Assistant U.S. Attorney R. Stephen Stigall of the U.S. Attorney’s Office Criminal Division in Camden.
Defense counsel is John F. Renner of Marlton.