Howell man charged with multimillion-dollar mortgage fraud

eCAMDEN, NJ — Two Toms River men and a Howell man have been charged in a multimillion-dollar mortgage fraud scheme and two of them were accused of fraudulently obtaining $3 million from the COVID-19 economic relief program, the U.S. Attorney’s office announced.

Arthur Spitzer, 37, and Mendel Deutsch, 38, both of Toms River, and Joshua Feldberger, 42, of Howell, were charged Tuesday, U.S. Attorney Philip R. Sellinger announced. They were arraigned before U.S. District Judge Edward S. Kiel in federal court in Camden.

Authorities allege that Spitzer orchestrated a scheme in 2019 and 2020 to defraud homeowners and mortgage lenders by obtaining mortgage loans for real estate properties he did not own.

As part of the scheme, Spitzer identified properties that had no mortgages or that had mortgages far below the property’s market value, then obtained mortgage loans secured by those properties and falsified documents to make it appear that control of the properties had been transferred to him, according to the indictment.

The loan proceeds were disbursed to bank accounts controlled by Spitzer or used to benefit Spitzer, such as to pay his debts, and he then allowed the loans to fall into default by failing to make required payments, leaving the true owners subject to foreclosure and eviction, authorities allege.

Spitzer did this six times, according to authorities.

According to the indictment, Deutsch and Feldberger became involved in Spitzer’s scheme in June 2020. In this case, they made it appear that Spitzer owned three properties in Brooklyn and agreed to sell them to Deutsch, who obtained a $4 million mortgage loan in connection with the transaction. Authorities allege that Feldberger facilitated the fraudulent transaction as the owner of the settlement company that handled the transaction.

The three men are accused of creating and sending letters indicating that Deutsch had deposited significant funds in escrow for the transaction, when in fact he had not; created false documentation purportedly transferring control of the properties to Spitzer; failed to disclose a short-term loan obtained shortly before the transaction closed; and lied to the mortgage lender by stating that the settlement company had received more than $2 million from Deutsch at closing, leading the mortgage lender to fund the loan, according to the indictment.

The defendants then used the mortgage loan money to fund Deutsch’s down payment, which he had allegedly already made, authorities said.

In addition to the mortgage fraud charges, authorities allege that Spitzer and Deutsch fraudulently obtained millions of dollars in government loans that were intended for small businesses struggling due to the COVID-19 pandemic.

Economic Injury Disaster Loans of up to $2 million were available to eligible small businesses; to obtain one, a qualified small business had to submit an application and provide information about its operations, including the number of employees and revenue or expenses.

Spitzer and Deutsch are accused of lying on EIDL loan applications, including lying about the number of employees at businesses, their revenue, cost of goods sold or lost rents, to obtain the loans for businesses that had little or no operations, according to authorities.

Spitzer is charged with eight counts of wire fraud, one count of bank fraud, one count of wire and bank fraud conspiracy, two counts of aggravated identity theft, one count of making a false statement to a financial institution and 12 counts of money laundering.

Deutsch is charged with three counts of wire fraud, one count of bank fraud, one count of conspiracy to commit bank and wire fraud, one count of aggravated identity theft, one count of making a false statement to a financial institution and two counts of money laundering.

Feldberger is charged with one count of wire fraud, one count of bank fraud, one count of conspiracy to commit bank and wire fraud, one count of aggravated identity theft and one count of making a false statement to a financial institution.

Authorities said the charges of conspiracy to commit bank fraud, bank fraud and making false statements to a financial institution are punishable by up to 30 years in prison and a $1 million fine. The charges of conspiracy to commit wire fraud and wire fraud are punishable by up to 20 years in prison and a $250,000 fine, or twice the gross gain or loss from the crime. The money laundering charges are punishable by up to 10 years in prison and a $250,000 fine, or twice the gross gain or loss from the crime. The charges of aggravated identity theft carry a mandatory sentence of two years in prison.

Howell man charged in multimillion-dollar mortgage fraud scheme originally appeared on Howell Patch