A New York-based Guyana-born lawyer and his sister have been accused of US$3.3 million mortgage fraud and larceny from a well-known American bank.

Queens District Attorney Richard A. Brown, joined by New York State Department of Financial Services Superintendent Benjamin M. Lawsky,  on Friday last announced that three individuals – including a Richmond Hill attorney and his sister – have been charged with conspiring to commit mortgage fraud and larceny from Wells Fargo Bank by fraudulently obtaining mortgage funds in excess of $3.3 million pertaining to the purchase of six properties – including four in Queens – during a six-month period in 2008.

A spokesman for the District Attorney Brown identified the three defendants as attorney Michael Gangadeen, 47, of 332 North Village Avenue in Rockville Center,New York, his sister Savitri (a.k.a. Savi) Gangadeen, 49, of 48 Willis Avenue inFloral Park, New York, and former Wells Fargo loan officer/mortgage consultant Paul Constante, 38, of 41 Ellison Avenue in Westbury, New York.

A spokesman for the District Attorney’s office, Kevin Ryan told  Demerara Waves Online News that up to Monday Michael had not been arrested. Ryan confirmed that Savitri was born in Guyana. An official at Michael's law office, who confirmed to DemWaves that he is Guyanese, said he was out for several hours transacting business.

Ryan further stated that Savitri Gangadeen and Paul Constante were arraigned Friday and granted $30,000 and $15,000 bail respectively. Up to late Monday they remained in a jail because they have not paid the bail. They are scheduled to return to court on April 23.

"It should be noted that complaint is merely an accusation and that a defendant is presumed innocent until proven guilty," stated the District Attorney Queen's County office in a statement.

District Attorney Brown said, “This complicated and devious scheme allegedly involved defendants who were so greedy that they pushed through more than $3.3 million in fraudulent mortgage loan transactions in just over six months by falsely inflating the income and assets of the borrowers. Their alleged actions resulted in all six properties going into default and forcing the bank to initiate foreclosure proceedings against the borrowers. Some of the properties were sold in short sales for up to one-third less than the sales prices that were paid to acquire the properties in the transactions involved in this case.”

Superintendent Lawsky said, “As alleged, the defendants not only stole money out of these mortgages, but even worse they left their victims out in the cold and facing foreclosure. We will continue to vigorously pursue mortgage fraud so that perpetrators are punished and homeowners are better protected.”

The Gangadeens and Constante have each been charged with first-degree grand larceny, first-degree criminal possession of stolen property, first-degree falsifying business records, fourth-degree criminal facilitation, first degree scheme to defraud and fourth-degree conspiracy. If convicted, they each face up to 25 years in prison.

District Attorney Brown said that, according to the charges, the defendant Constante, who at the time was a loan officer/mortgage consultant for Wells Fargo Home Loans, prepared and submitted the loan applications of the applicants purchasing the six properties – and which contained information, such as the borrowers’ employment, income, assets and liabilities – and stated that he had obtained the information from interviewing the applicants.

Wells Fargo business records allegedly included supporting loan documentation that consisted of the applicants’ pay stubs and bank statements. It is alleged that in reviewing the supporting loan documentation several of the bank statements submitting for the different borrowerscontained the same transaction details for deposits and withdrawals but had been changed to reflect the respective borrower’s name, a different account number and a different opening and ending balance. It is additionally alleged that the same account numbers were used for different borrowers in at least two instances and that there were instances where a borrower’s name was reflected on one page of a bank statement but a different name was reflected on a second page of the same bank statement.

It is further alleged that at least four of the borrowers stated that they had never provided the defendant Constante with the information contained on the loan applications about their employment, income and assets and, in fact, had never communicated or had any dealings with him and that the information on the applications was false and inflated and that they were unaware that the bogus information was submitted in order for their loans to be approved.

The four borrowers allegedly stated that the person they met with about their loan and to whom they provided information regarding their actual employment status, income, pay stubs and bank statements was defendant Savitri Gangadeen, an employee of MTS Funding, a mortgage brokerage company located at 85-52 114th Street in Richmond Hill, Queens. MTS Funding was owned and operated by defendant Michael Gangadeen, who also maintained a law office at the same location between January 1, 2008, and June 26, 2008, and it was there that the closings for all six properties took place and in which Michael Gangadeen acted as the settlement attorney for the bank and as the individual preparing the settlement statements.

In one instance, it is alleged that the Wells Fargo business records pertaining to a property that defendant Michael Gangadeen was selling to one of the buyers contained a HUD settlement statement – prepared and signed by Michael Gangadeen as the bank’s settlement attorney and also as the seller – indicating that he had received a $5,000 deposit from the borrower for the purchase of the property and further that the borrower had paid $96,134.75 that was due at the closing.

In fact, it is alleged, the borrower had neither made a down payment nor did she make any payments at the closing. Based on a review of Wells Fargo business records, Michael Gangadeen received more than $60,000 from this transaction.

Similarly, in each of the other five transactions, the buyers were required to bring a total of more than $315,000 to the closings in order for the closings to proceed and mortgage funds to be released – otherwise Michael Gangadeen was required by Wells Fargo to stop the closings and not proceed. It is alleged that in three instances, the buyers did not pay a total of $187,650 that was due at the closings and that the closings proceeded – with Michael Gangadeen allegedly signing certifications as the bank’s attorney attesting that the money due from the buyers was paid.

Finally, it is alleged that a review of Capital One Bank business records pertaining to Michael Gangadeen’s escrow account showed that Gangadeen made disbursements of the mortgage proceeds to himself and others and did not comport fully with the representations made in the HUD settlement statements for the six purchased properties. For instance, it is alleged that there were hidden and unauthorized disbursements made to Savitri Gangadeen in amounts that often exceeded $5,000 per closing. Similarly, a review of Wells Fargo Bank’s business records allegedly revealed that defendant Constante received commissions in excess of $3,000 for originating the six loans.

The six transactions were: a $474,050 mortgage loan on January 24, 2008, for the purchase of 2 Cypress Court in Brooklyn; a $522,500 mortgage loan on April 8, 2008, for  the purchase of 133-03 Linden Boulevard in South Ozone Park, Queens; a $600,300 mortgage loan on April 14, 2008, for the purchase of 216-32 136th Road in Laurelton, Queens; a $612,000 mortgage loan on April 25, 2008, for the purchase of 134-25 226th Street in Jamaica, Queens; a $576,000 mortgage loan on May 9, 2008, for the purchase of 690 East 37th Street in Brooklyn; and a $533,000 mortgage loan on June 25, 2008, for the purchase of 128-04 116th Avenue in Richmond Hill, Queens.

The investigation was conducted by the Criminal Investigation Bureau of the New York State Department of Financial Services.

District Attorney Brown expressed his thanks to Wells Fargo Bank for their cooperation and assistance in the investigation.

Assistant District Attorney Allison P. Wright, of the District Attorney’s Economic Crimes Bureau, is prosecuting the case under the supervision of Gregory Pavlides, Bureau Chief, and Christina Hanophy, Deputy Bureau Chief, and the overall supervision of Executive Assistant District Attorney Peter Crusco and Deputy Executive Assistant District Attorney Linda Cantoni of the Investigations Division.