TRENTON, NJ — A real estate developer and New Jersey attorney each admitted today to conspiring to orchestrate a mortgage fraud scheme that resulted in over $3.5 million in losses, US Attorney Philip R. Sellinger announced .
Victor Santos, aka Vitor Santos, 63, of Watchung, NJ, and Fausto Simoes, 69, of Millington, NJ, each pleaded guilty via videoconference to count 1 of an indictment alleging conspiracy to commit bank fraud before a U.S. District Judge accused Michael A. Shipp in Trenton federal court.
According to the documents and testimonies filed in court in this case:
From September 2007 to November 2008, Santos, a real estate developer, and Simoes, a lawyer, conspired with each other and others to fraudulently obtain more than $4 million in mortgage loans. Santos orchestrated the program to recruit bogus or “straw” buyers to purchase 12 properties in Newark. Using the identities and credit of these straw buyers allowed Santos, Simoes, and their conspirators to hide their identities as the actual buyers of the properties from the lender. Santos and others got people to be straw buyers by agreeing to pay each straw buyer at least $5,000, attract tenants to rent the properties they bought, and cover costs associated with the property, including property purchase fees and the mortgage payments for each of the fraudulently obtained mortgages. Santos, Simoes and others also caused fraudulent and false loan applications and documents to be submitted to the mortgage lender.
Simoes completed 10 of the fraudulent transactions and helped perpetuate the scam by falsely reporting that the straw buyers provided the cash needed to complete the transaction, when in reality Simoes received these funds from a shell company owned by Santos and a other conspirators was controlled. In several transactions, Simoes also failed to tell the lender that the Santos-controlled shell company and another conspirator would receive a sizable payout from the loan proceeds.
Shortly after the properties were acquired, Santos and his conspirators broke their promises to pay the mortgages. The straw buyers, on whose behalf the mortgages were taken and who were therefore responsible for making the payments, did not have enough money to pay the fraudulently obtained mortgages and defaulted, causing lender Fannie Mae and insurers to pay more lost than $3.5 million.
Conspiracy to commit bank fraud carries a possible maximum sentence of 30 years in prison, a $1 million fine, or double the gross profits for the accused, or double the gross losses for others, whichever is the greatest. Sentence is scheduled for April 12, 2023 for Santos and April 13, 2023 for Simoes.
Two other conspirators previously pleaded guilty and are awaiting conviction.
U.S. Attorney Sellinger credited special agents from the Federal Housing Finance Agency, Office of Inspector General, headed by Special Agent in Charge Robert Manchak, and special agents from the FBI, headed by Special Agent in Charge James E. Dennehy in Newark, conducting the investigation led to the guilty pleas.
The government is represented by Assistant US Special Attorneys Charlie Divine and Kevin DiGregory of the Federal Housing Finance Agency, Office of Inspector General, who are assigned to the US Attorney’s Office of Newark Economic Crimes Division.