Federal prosecutors alleged that from 2005 through 2007, Micah Meyers, a former manager at Islip, New York based mortgage brokerage firm Bridgewater Funding, LLC ("Bridgewater"), submitted fraudulent loan applications as part of a scheme to wrongfully obtain loans.
As part of the scheme, Meyers identified properties for sale primarily in New York City and Long Island (the "target properties"), often in the $250,000 to $500,000 range. In some instances, Meyers identified target properties whose homeowners were facing foreclosure. These particular homeowners were then duped into selling their properties as part of a plan by which they were told they could pay off their debts and save their homes.
In other instances, Meyers identified target properties that he believed could be resold quickly ("flipped"). The attraction of these flippable properties was that Meyers reduced his exposure to any decline in property value by anticipating an ability to quickly sell the subject realty.
In furtherance of his scheme, Meyers recruited so-called "straw buyers" to act as purchasers of the target properties. These proxies (sometimes friends and family, and also folks relatively unsophisticated with real estate transactions) would be paid a fee by Meyers when they relinquished to him their control over the target properties upon the completion of the mortgage.
Upon finalizing his agreement with a straw buyer, Meyers would submit through Bridgewater the straw buyer's loan applications to the defrauded lenders. Typically, Meyers got the straw buyers' mortgages for amounts greater than the actual sales price of the property by misrepresenting to the lenders such factors as the straw buyers' income, assets, debts, and intent to live in the properties (as well as the nature of the transaction with the sellers). Meyers profited by arbitraging the difference between the amount of the loans and the properties' actual sale prices.
Following the funding of the targeted properties, Meyers often failed to make his promised mortgage payments, causing the straw buyers to default. Consequently, the lenders either foreclosed or re-purchased the properties from the straw buyers for less than the loan. Unfortunately, the original homeowner, who had been duped by Meyers, now faced eviction rather than the promised salvation of the home.
In some situations, Meyers rented the targeted properties to tenants. In this variation, Meyers applied the collected rent and other monies earned from the scheme to make mortgage payments on behalf of the straw buyers for a period of time before defaulting on the mortgages.
Finally, in some cases, Meyers made mortgage payments for months before reselling, or "flipping," the property to yet another straw purchaser, who fraudulently obtained a new mortgage with the defendant's assistance, restarting the fraudulent scheme.Indictment
On May 28, 2009,. a 15-count federal Indictment was unsealed charging MICAH MEYERS, STEPHEN CAPUTO, DAWN HUGHES, FNU LNU a/k/a "Eddie Garcia," JAKOB GEARWAR, BRIAN URRARO, MICHAEL DIDIO, DANIEL HAMPTON, JENNIFER MOSCHITTA, VICTOR AVENDANO, ADRIAN AVENDANO, JANET MCGUINNESS, and LIAM LEAVEY in connection with their roles in the sub-prime mortgage fraud scheme referenced above that involved dozens of mortgages, totaling more than $10 million.
NOTE: The charges contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty in a court of law.
SIDE BAR: For those of you unfamiliar with the lingo of criminal prosecutions, FNU LNU is not a Polynesian criminal. It is an acronym for First Name Unknown, Last Name Unknown - in this case, they're guessing that the guy known as "Eddie Garcia" has some other real name.
On May 27, 2010, Meyers pled guilty to one count of conspiracy to commit bank and wire fraud. On August 1, 2011, Meyers, 32, was sentenced to 60 months in prison,three years supervised release, and ordered to forfeit $1,000,000.