New York man admits role in mortgage fraud scheme involving Hartford apartment buildings | USAO-CT
Vanessa Roberts Avery, United States Attorney for the District of Connecticut, announced that JACOB DEUTSCH, 57, of Brooklyn, New York, waived his right to be charged and pleaded guilty today before the judge in U.S. District Omar A. Williams in Hartford on a charge stemming from a massive mortgage fraud scheme involving 24 mortgages on numerous multi-family housing properties in Hartford totaling nearly $50 million.
According to court documents and statements in court proceedings, Jacob Deutsch and Aron Deutsch work at BH Property Management, LLC (“BHPM”), a property management company that manages many multi-family housing properties in Hartford. From September 2016 to May 2021, Jacob Deutsch, who ran the day-to-day operations of BHPM, and Aron Deutsch engaged in a scheme to defraud several financial institutions, government-sponsored firms Federal Home Loan Mortgage Company (“Freddie Mac” ) and the Federal National Mortgage Association (“Fannie Mae”) and the United States Department of Housing and Urban Development (“HUD”) by providing them with false information exaggerating the value of multifamily housing properties managed by BHPM in connection with loans guaranteed by these properties.
As part of the scheme, Jacob Deutsch provided false rent records and forged leases to victim financial institutions and their appraisers, who either overstated the number of tenants by listing fictitious tenants or others who did not live there. not actually, or falsely inflated the amount of rent paid. by the occupants. Jacob Deutsch tricked the inspectors into thinking unoccupied apartments were occupied by staging the apartments with furniture and getting BHPM employees to falsely tell the inspectors they lived there and lie to the inspectors if we asked them if there were any vacancies. For example, a rent register and summary of income and expenses submitted by Jacob Deutsch to CBRE Capital Markets, Inc. (“CBRE”) in June 2018 incorrectly indicated that 16 Evergreen Avenue was 100% occupied when in fact, not a single tenant resided. there at the time. Jacob Deutsch later emailed CBRE photos of money orders and checks purporting to reflect rent payments from bogus tenants on the falsified rent lists at 16 Evergreen Avenue to show proof of rent payment while in fact, the money orders and checks had been purchased by Aron Deutsch or employees of BHPM under the direction of Aron Deutsch.
Jacob Deutsch also provided the victimized financial institutions with false and inflated tax returns and financial statements for the properties, doctored bank statements, doctored or forged documents exaggerating the purchase price of various multi-family dwellings, as well as checks and doctored invoices showing false or overstated capital improvements. to these properties. The false information provided by Jacob Deutsch prompted the victim financial institutions to grant loans that they would not otherwise have granted on the terms requested, or for amounts greater than those they would have authorized if they had received truthful information. Additionally, the misinformation prompted Freddie Mac and Fannie Mae to purchase the resulting loans from the victim financial institutions and prompted HUD to issue a mortgage insurance commitment to a victim financial institution.
Jacob Deutsch and Aron Deutsch were arrested on a criminal complaint on May 19, 2021.
Today, Jacob Deutsch pleaded guilty to one count of conspiracy to commit mail fraud and wire fraud affecting a financial institution, an offense that carries a maximum prison sentence of 30 years. He is released on $50,000 bond pending sentencing, which is not scheduled.
Aron Deutsch, 61, of Monsey, New York, pleaded guilty to the same charge on June 1, 2022. He is released on $100,000 bond pending sentencing, scheduled for November 3.
This investigation was conducted by the United States Postal Inspection Service, the Federal Housing Finance Agency’s Office of Inspector General, and HUD’s Office of Inspector General for Investigations. The case is being prosecuted by Assistant US Attorneys Heather Cherry and Sarah Gruber.