White Collar Crime News

Woman Charged in Multi-Million Dollar Scheme to Obtain Mortgage Loans June 17, 2010

Attorney General Paula T. Dow and Criminal Justice Director Stephen J. Taylor today announced charges against a Kearny woman who allegedly orchestrated a scheme to steal millions of dollars by obtaining mortgage loans using false identities and counterfeit documents.

According to Director Taylor, Genilza R. Nunes, 36, of Kearny, was arrested on March 9 by detectives of the Division of Criminal Justice Major Crimes Bureau as a result of an ongoing investigation into the conspiracy. She was charged by complaint with first-degree conspiracy, first-degree money laundering, second-degree securities fraud and second-degree theft by deception. She has been held in state custody since that time with bail set at $2 million.

Because the investigation by the Division of Criminal Justice is ongoing, the charges were not announced until today. Nunes was charged today with other defendants in a federal investigation into related activities announced by the U.S. Attorney’s Office and FBI in Newark.

The state investigation by the Division of Criminal Justice Major Crimes Bureau determined that Nunes and a number of co-conspirators allegedly were involved in a sophisticated, multi-million dollar mortgage loan fraud scheme operating in northern New Jersey, including Morris, Hudson, Union and Essex Counties. The fraudulent enterprise allegedly included licensed and unlicensed professionals, including real estate agents, mortgage loan brokers, real estate appraisers, notaries, lawyers, straw buyers and counterfeit document makers.

Nunes allegedly was one of the people responsible for creating phony documents, including false identification cards, fraudulent financial documents, inflated real estate appraisals, altered real estate transfer documents, and fraudulent government documents, including U.S. passports and numerous state motor vehicle licenses. Nunes and others involved in the scheme used false names and the fraudulent documents to disguise their true identities.

Nunes and her co-conspirators allegedly defrauded numerous lending institutions of millions of dollars through what is known as a “short sale mortgage loan property flip scheme.” A “short sale” is a type of pre-foreclosure sale of real estate where the lender holding the mortgage agrees to permit the property to be sold for a price less then the amount due on the mortgage loan. Short sales have become more prevalent due to the recent economic downturn.

In this case, individuals involved in the scheme were purchasing the properties as straw buyers, using false identities supported by counterfeit driver’s licenses, false financial records, and fictitious credit histories. Through a series of fraudulent transactions, the short sale properties were then sold or “flipped” at inflated values derived from fraudulent appraiser reports. A second straw buyer applied for a mortgage loan on the inflated property and obtained the loan under a false identity. The short sale property was then purchased with the loan proceeds, and, by design, the straw buyer made no payments on the loan, causing a loan default.

Because the straw buyer used a false identity, the lending institution was unable to locate the borrower. The difference between the sales price for the short sale transaction and the inflated loan obtained represented the net proceeds of the fraudulent scheme. Typically Nunes and her co-conspirators obtained $100,000 to $300,000 per transaction.

The state alleges Nunes was responsible for cultivating and creating straw buyers, including real and fake persons, for the purpose of engaging in the scheme. The state has specifically alleged that Nunes engaged in fraudulent transactions involving five properties, with a total fraud of $2,152,800. However, it is believed that the scheme is much larger. The investigation is continuing and additional charges are anticipated.