Three licensed attorneys and a licensed realtor in New Jersey were indicted for their roles in defrauding financial institutions in a short sale fraud scheme.
Lawyers Bruce Egert, Nelson Kong, Seung Han Shin (aka Aaron Shin) and realtor Francisco Sanchez were each indicted by a federal grand jury with one count of conspiracy to commit bank fraud and three counts of bank fraud. Egert and Kong were also charged with three counts of false statements to a financial institution.
According to the charges brought against them, Egert, Kong, Shin, Sanchez, and others fraudulently induced mortgage lenders to participate in “short sale” transactions between June 2013 and December 2016. Mehdi Kassai, with the help of his conspirators, used fraudulent misrepresentations and false statements to purchase homes at significant discounts from the note-holding banks both in his name and using stolen identities. Kassai, Egert, Kong, Shin, and Sanchez failed to reveal to the banks that Kassai and Egert had already arranged to flip the homes to other buyers at much higher prices. The homes were flipped in violation of deed restrictions regarding the time before which a resale could occur and the maximum resale price.
As a result, some of the properties purchased were resold at a substantial profit the same day the short sale closed.
Steve Kang and Joshua Son were realtors who represented short sale sellers whose homes were sold to Kassai. In return for their involvement in the scheme, Kassai shared with them portions of the profits of the resales. Egert was Kassai’s attorney who represented him in the short sales and conspired with Kassai to use stolen identities to purchase short sale properties and submitted or caused to be submitted fraudulent HUD-1 Settlement Statements to the victim banks.
Kassai recruited Kong to represent certain sellers, and, among other things, Kong drafted agreements. Shin was a bankruptcy attorney Kassai paid to file bankruptcy petitions on behalf of short sale sellers to forestall imminent foreclosures on the properties. Shin failed to disclose that Kassai, the short sale buyer, was involved in these transactions. Sanchez was a realtor Kassai paid to assist in the management and control of the short sale process. If Kassai attempted to buy a short sale property in his own name and was rejected, Sanchez assisted Kassai with finding a straw buyer to acquire the short sale property.
Kassai pleaded guilty in December 2018 to an information charging him with bank fraud (Counts One and Two), wire fraud affecting a financial institution (Count Three), and money laundering (Count Four). He was sentenced to 16 months in prison, three years of supervised release, and ordered to pay $7.94 million in restitution for 32 illicit transactions.
Kang pleaded guilty in May 2019 to an information charging him with bank fraud (Count One) and wire fraud affecting a financial institution (Count Two). He was sentenced to time served and ordered to pay $2.38 million in restitution.
Son pleaded guilty in May 2019 to an information charging him with bank fraud (Count One) and wire fraud affecting a financial institution (Count Two). He was sentenced to time served, two years of supervised release, and ordered to pay $2.38 million in restitution.
The conspiracy to commit bank fraud count, bank fraud counts, and false statements to a financial institution counts each carry a maximum potential penalty of 30 years in prison and a fine of $1 million, or twice the gross gain or loss from the offense, whichever is greatest.
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