By: Yuritza Arroyo
A New Jersey real estate developer and attorney each admitted today to conspiring to orchestrate a mortgage fraud scheme that led to over $3.5 million in losses federal officials announced.
According to federal officials, Victor Santos, aka Vitor Santos, 63, of Watchung and Fausto Simoes, 69, of Millington, each pleaded guilty by videoconference to Count One of an indictment charging them with conspiracy to commit bank fraud in Trenton federal court.
According to documents filed in this case and statements made in court:
From September 2007 through November 2008, Santos, a real estate developer, and Simoes, an attorney, conspired with each other and others to fraudulently obtain mortgage loans with a total value of more than $4 million.
Court documents state, Santos orchestrated the scheme to recruit fake or “straw” buyers to purchase 12 properties in Newark.
Using the identity and credit of these straw buyers allowed Santos, Simoes, and their conspirators to conceal their identities from the lender as the actual purchasers of the properties.
Officials say, Santos and others induced people to be straw buyers by agreeing to pay each straw buyer at least $5,000, secure tenants to lease the purchased properties, and cover costs associated with the property, including fees related to the real estate purchases and the mortgage payments on each of the fraudulently obtained mortgages.
Santos, Simoes, and others also caused the submission of fraudulent and false loan applications and documents to the mortgage lender.
According to officials, Simoes conducted the closings of 10 of the fraudulent transactions and helped perpetuate the fraud by falsely reporting that the straw buyers were providing the cash required at closing when, Simoes 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.
Shortly after the properties were acquired, Santos and his conspirators broke their promises to pay the mortgages.
According to federal officials, the straw buyers, in whose names the mortgages were obtained and thus were responsible for the payments, did not have enough money to pay the fraudulently obtained mortgages and defaulted, which caused the lender, Fannie Mae, and insurers to lose more than $3.5 million.
Conspiracy to commit bank fraud carries a maximum potential penalty of 30 years in prison, a fine of $1 million or twice the gross gain to the defendants or twice the gross loss to others, whichever is greatest.
Sentencing for Santos is scheduled for April 12, 2023, and for Simoes, April 13, 2023. Two other conspirators previously pleaded guilty and are awaiting sentencing.