N.J. developer, attorney admit orchestrating big money mortgage fraud scheme

A New Jersey real estate developer and an attorney admitted Friday that they helped orchestrate a mortgage fraud scheme that led to over $3.5 million in losses, federal prosecutors said.

The developer, Victor Santos, aka Vitor Santos, 63, of Watchung, and the attorney, Fausto Simoes, 69, of Millington, worked together with two others to fraudulently obtain more than $4 million in mortgage loans, according to a statement from the US Attorney’s Office.

Santos recruited fake, or “straw” buyers to purchase 12 properties in Newark and using their identities and credit, allowed him and Simoes to hide themselves from the lender as the ones who were actually buying the real estate, the office said.

Santos and others wrangled the straw buyers by agreeing to pay each of them at least $5,000, having them secure tenants to lease the purchased properties, and cover costs associated with the property, including fees associated with the real estate purchases and the mortgage payments on each of the fraudulently obtained mortgages, authorities said. The conspirators also submitted fake loan applications and documents to the mortgage lender.

According to the office, Simoes conducted the closings of 10 of the fake transactions and helped accelerate the lie by falsely reporting that the straw buyers were providing the cash required at closing when, in fact, he received those funds from a shell company controlled by Santos and another conspirator. For several transactions, Simoes also failed to disclose to the lender that the shell company controlled by Santos and another conspirator would receive a substantial payout from the loan proceeds.

Not long after the properties were acquired, the conspirators broke their promises to pay the mortgages, leaving the straw buyers responsible for the payments, federal prosecutors said. Thy did not have enough money to pay the mortgages and defaulted, which caused the lender, Fannie Mae, and insurers to lose more than $3.5 million.

Santos and Simoes were charged in 2017 for their roles in the scheme along with Arsenio Santos, of Warren, and Raquel Casalinho, of Union, officials said. Arsenio Santos is a home builder and Casalinho worked as a home mortgage consultant.

Victor Santos and Simoes pleaded guilty Friday in Trenton federal court to conspiracy to commit bank fraud and were scheduled to be sentenced in April 2023, the office said. Arsenio Santos and Casalinho previously pleaded guilty and were awaiting sentencing.

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Chris Sheldon may be reached at csheldon@njadvancemedia.com.

Read More:N.J. developer, attorney admit orchestrating big money mortgage fraud scheme

2022-11-23 22:49:00

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