Herskowitz’s attorney declined to comment for this story, citing the ongoing case. He paid a $281,000 settlement in the Florida case and pleaded guilty to a disorderly conduct violation in the second. Since 2015, Herskowitz has been implicated in at least two other schemes targeting borrowers in foreclosure in Florida and Queens. Two of them also were released on bond, including Michael Herskowitz, a 40-year-old Brooklyn lawyer. The four other men were arraigned in Brooklyn. That gave the investors leverage to pay less, because no one else could buy the house - but this left some homeowners, like Denise Riera of the Bronx, on the hook for mortgages to homes they no longer owned.Īronov appeared in court in Miami and his bond was set at $500,000, according to court papers. In some cases, homeowners said the investors got them to sign over the deeds to their homes before the sales went through, claiming it was a normal part of the short-sale process. New York state also passed legislation this year meant to better protect homeowners who had been the target of predatory investment or fraud.īuzzFeed News found at least 12 lawsuits in which borrowers said they had been deceived by the group. At least 20 people have been convicted in alleged scams. The indictment comes amid a larger crackdown on predatory real estate investment targeting New Yorkers who remain in foreclosure, dubbed an “epidemic of fraud” by an investigative grand jury last year. “Many of these homes were located in economically challenged areas of New York where affordable housing is at a premium.” “What makes their alleged crimes even more egregious was their artificial devaluation of properties that, when resold or ‘flipped,’ resulted in large profits,” said Special Agent in Charge Christina Scaringi of the US Department of Housing and Urban Development’s Office of Inspector General, one of several agencies involved in the investigation. In the process, the partners helped fuel the rapid gentrification of brownstone Brooklyn, displacing black and Latino families who in many cases had lived there for decades, and repopulating the area with young, mostly white professionals. Donoghue, United States attorney for the Eastern District of New York, announced. ![]() ![]() “As alleged, the defendants defrauded mortgage loan holders out of millions of dollars, with taxpayers saddled with much of the loss,” Richard P. ![]() ![]() BuzzFeed News linked the group to nearly 240 homes. Prosecutors this week said Aronov and his team, which controlled every aspect of the short-selling process, traded on “false, misleading and incomplete” information, lying to the government and to lenders like Fannie Mae and Freddie Mac, failing to disclose unauthorized payments and their business relationships. Then, with the original owners gone, the partners performed fast gut renovations, installing modern fixtures and marble counters, and resold the homes for north of a million dollars. The partners negotiated with banks to let the property go for far less than market rate, a process known as short selling. Two years ago, BuzzFeed News revealed how this group of investors turned properties on the brink of foreclosure into million-dollar listings sold on the reality TV show Million Dollar Listing New York.Īmid the lingering effects of the mortgage crisis, Iskyo “Isaac” Aronov and his four partners located homeowners in rapidly gentrifying neighborhoods who owed more than they could pay. The US Attorney’s Office for the Eastern District of New York charged the men with conspiracy to commit wire fraud and bank fraud. Five real estate investors whose business was the subject of a major BuzzFeed News investigation were arrested this week for allegedly defrauding lenders and taxpayers out of millions of dollars in a scheme that targeted New Yorkers at risk of foreclosure.
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