Indictment — United States of America v. Arthur Spitzer Mendel Deutsch
Summary
An indictment returned by the Grand Jury for the District of New Jersey, sitting in Camden, in United States v. Arthur Spitzer, Mendel Deutsch and Joshua Feldberger, citing 18 U.S.C. § 1349, § 1344, § 1348, § 1028A(a)(1), § 1014, § 1957(a) and § 2. Its introduction alleges that during 2019 and 2020 Spitzer defrauded property owners and mortgage lenders by obtaining mortgage loans on properties in New Jersey and Brooklyn, New York that he did not own, obtaining more than $20,000,000 in mortgage loans with fraudulent documents. The indictment alleges that Settlement Company-1 wired approximately $1,900,000 of one property's mortgage loan proceeds to an account of BSD Realty Holdings, Inc., which Spitzer controlled. It also alleges that Individual-2 did not authorize a $997,500 mortgage loan.
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Full text
2021R00609/DAF
F| L E; D
UNITED STATES DISTRICT COURT
A
DISTRICT OF NEW JERSEY U6 2 | 2024
CLE 880 :
UNITED STATES OF AMERICA : Hon. SOR
OURF D,
V. : Crim. No. 24- 523 Cesk) MW
ARTHUR SPITZER, : 18 U.S.C. § 1349
MENDEL DEUTSCH, and : 18 U.S.C. § 1344
JOSHUA FELDBERGER : 18 U.S.C. § 1348
: 18 U.S.C. § 1028A(a)(1)
18 U.S.C. § 1014
18 U.S.C. § 1957(a)
18 U.S.C. § 2
INDICTMENT
The Grand Jury in and for the District of New Jersey, sitting in
Camden, charges:
INTRODUCTION
1. During 2019 and 2020, defendant ARTHUR SPITZER orchestrated a
scheme to defraud property owners and mortgage lenders by obtaining mortgage
loans for real estate properties that SPITZER did not own. Defendant SPITZER
identified real estate properties in New Jersey and Brooklyn, New York that had
either no mortgages or mortgages in amounts significantly lower than the
property’s market value. Working at times without co-conspirators charged in this
Indictment, and at other times with defendants MENDEL DEUTSCH and JOSHUA
FELDBERGER, defendant SPITZER obtained more than $20,000,000 in mortgage
loans by using fraudulent documents purportedly showing that he—or entities he
controlled—had the authority to apply for mortgage loans. The mortgage loan
proceeds were disbursed to bank accounts controlled by defendant SPITZER or were
used to otherwise benefit defendant SPITZER, such as to pay off defendant
SPITZER’s debts. Defendant SPITZER then caused the mortgage loans to default
by not making the required payments, leaving the true property owners subject to
foreclosure and eviction.
2. Further, in 2020 and 2021, defendants ARTHUR SPITZER and
MENDEL DEUTSCH fraudulently obtained millions of dollaxs of government loans
that were intended for small businesses distressed by the COVID-19 pandemic by
submitting loan applications that included false statements about the applicant
companies’ number of employees, revenues, cost of goods sold, or lost rents.
COUNT 1
(Wire Fraud)
(56% Street)
Background
1, At all times relevant to this Indictment:
Mortgage Lending
a. Mortgage loans were loans made by banks and other financial
institutions to borrowers: (a) in connection with the purchase of real estate; or (b) in
connection with the refinancing of real estate. Mortgage loans were secured by the
real estate property such that if the borrower defaulted on the loan, the lender
would have the ability to seek foreclosure of the real estate property securing the
loan.
b. A mortgage loan borrower typically applied for a mortgage loan
through a mortgage lender or a mortgage originator. If a borrower applied directly
with a mortgage lender, the borrower would provide documentation directly to the
2
mortgage lender and the mortgage lender would directly fund the loan. Ifa
borrower applied with a mortgage originator, sometimes the mortgage originator
would make the initial loan to the borrower and then sell the loan to a mortgage
lender after a short period of time. Other times, the mortgage originator would
obtain and verify the relevant information for a mortgage lender, and then the
mortgage lender would issue the mortgage loan directly to the borrower. The
information submitted by a borrower was material to the mortgage lender’s decision
whether or not to extend a mortgage loan.
c. A mortgage loan typically was closed by a settlement agent. The
settlement agent was responsible for receiving monetary instruments and funds
provided by the borrower and mortgage funds from the lender to the title company’s
escrow account, and, when authorized by the parties to the transaction and the
lender, for disbursing those funds from the escrow account to various individuals
and entities, as detailed on the U.S. Department of Housing and Urban
Development Settlement Statement (hereinafter “HUD-1 Settlement Statement”).
The HUD-1 Settlement Statement detailed the actual disbursement of monies, :
including mortgage fund loans, to the proper entities and/or individuals. The HUD-
1 Settlement Statement was required to accurately disclose the receipt and
disbursement of all monies involved in a real estate transaction, including whether
any monies were being used to pay off existing loans. The borrower and a
representative of the title company typically signed the HUD-1 Settlement |
Statement affirming that it was true and accurate.
Individuals and Entities
d. Defendant ARTHUR SPITZER was a resident of Toms River,
New Jersey.
e. Bank-1 was a “financial institution” within the meaning of Title
18, United States Code, Section 20.
f. BSD Realty Holdings, Inc. was a New Jersey company controlled
by defendant SPITZER. BSD Realty Holdings, Inc. had a bank account at Bank-1,
whose signatory was defendant SPITZER.
g. Mortgage Lender-1 was a mortgage lender with its principal
place of business in California and therefore was a “financial institution” within the
meaning of Title 18, United States Code, Section 20. Mortgage Lender-1 made
mortgage loans directly to borrowers and also had relationships with mortgage
originators, who made mortgage loans to the borrowers under guidelines provided
by Mortgage Lender-1, which loans were then transferred to Mortgage Lender-1.
h. Mortgage Originator-1 was a New Jersey mortgage originator
that originated loans for Mortgage Lender-1. Mortgage Oviginator-1 also made
loans to defendant SPITZER that were not secured by real estate.
i, Settlement Company-1 was a title and real estate settlement
company located in Howell, New Jersey.
j. The Fedwire Funds Service (“Fedwire”) was a real-time gross
settlement system that enabled participants to transfer funds from one financial
institution to another financial institution. Every Fedwire funds transfer involved
an exchange of electronic communications between Federal Reserve facilities in
New Jersey and Texas.
The Scheme to Defraud
2. In or about August 2019, in Ocean County in the District of New
Jersey, Kings County in the Kastern District of New York, and elsewhere,
defendant
ARTHUR SPITZER
did knowingly and intentionally devise and intend to devise a scheme and artifice to
defraud, and aid and abet the scheme and artifice to defraud Individual-1 and
Mortgage Lender-1, and to obtain money and property by means of materially false
and fraudulent pretenses, representations, and promises, which scheme and artifice
was in substance as set forth below.
Object of the Scheme
3. The object of the scheme was for defendant ARTHUR SPITZER to
financially enrich himself and satisfy outstanding debts by fraudulently obtaining
mortgage loans secured by real estate properties that he did not have authority to
use as collateral for the mortgage loans.
Manner and Means of the Scheme
A, It was part of the scheme that, prior to 2000, Individual-1 purchased
two residential buildings located on 56th Street in Brooklyn, New York (the “56t
Street Properties”). There were no mortgage loans on the 56 Street Properties in
2019.
5. It was further part of the scheme that in or around August 2019,
defendant SPITZER created an entity (the “56 Street LLC”) of which defendant
SPITZER was the sole member.
6. It was further part of the scheme that in or around August 2019,
defendant SPITZER caused to be prepared deeds purportedly transferring
ownership of the 56" Street Properties from Individual-1 to the 56 Street LLCs.
These deeds were prepared without Individual-1’s understanding or authorization.
7. It was further part of the scheme that in or around August 2019,
defendant SPITZER, acting on behalf of the 56" Street LLC, applied for and
obtained loans of $1,200,000 on each of the two 56th Street Properties (for a total of
$2,400,000) through Mortgage Originator-1 and Mortgage Lender-1. The mortgage
loans were secured by the 56 Street Properties. Settlement Company-1 was the
settlement agent for the mortgage transaction. Settlement Company-1 employees
were located in New Jersey when they worked on the 56th Street transaction.
8. It was further part of the scheme that Mortgage Lender-1 wired the
mortgage proceeds to Settlement Company-1’s escrow account as follows:
“Date , 2] Pete ae ee ee a
8/27/2019 $1,191,611.65 Interstate wire, sent through the Fedwire
system, from Mortgage Lender-l’s bank
account to Settlement Company-1’s escrow
account, representing the proceeds of the
mortgage loan for the first of the 56 Street
Properties.
8/27/2019 $1,191,611.65 Interstate wire, sent through the Fedwire
system, from Mortgage Lender-l’s bank
account to Settlement Company-l’s escrow
account, representing the proceeds of the
mortgage loan for the second of the 56th Street
Properties.
9. It was further part of the scheme that Settlement Company-1 wired
approximately $1,900,000 of the 56 Street mortgage loan proceeds from its escrow
account to a bank account at Bank-1 in the name of BSD Realty Holdings, Inc.,
which was controlled by defendant SPITZER as follows:
8/28/2019 $850,250.00 Interstate wire, sent through the Fedwire
system, from Settlement Company-l’s escrow
account to the BSD Realty Holdings, Inc. bank
account. .
8/28/2019 $8,193.11 Interstate wire, sent through the Fedwire
system, from Settlement Company-1’s escrow
account to the BSD Realty Holdings, Inc. bank
account,
8/28/2019 $20,391.11 Interstate wire, sent through the Fedwire
system, from Settlement Company-1’s escrow
account to the BSD Realty Holdings, Inc. bank
account,
8/28/2019 $529,625.00 Interstate wire, sent through the Fedwire
system, from Settlement Company-1’s escrow
account to the BSD Realty Holdings, Inc. bank
account,
8/28/2019 $529,625.00 Interstate wire, sent through the Fedwire
system, from Settlement Company-1’s escrow
account to the BSD Realty Holdings, Inc, bank
account.
10. It was further part of the scheme that Settlement Company-1 wired
more than $300,000 of the 56 Street mortgage loan proceeds to Mortgage
Originator-1 to satisfy outstanding debts previously incurred by defendant
SPITZER as follows:
Approximate |
“oe Date Approxi mate |[ =——S— esr
S*«C@iption
D
1 Amount.
8/28/2019 $253,000 Interstate wire, sent through the Fedwire
system, from Settlement Company-1’s
escrow account to the Mortgage Originator-
1 bank account.
8/28/2019 $60,000 Interstate wire, sent through the Fedwire
system, from Settlement Company-Il’s
escrow account to the Mortgage Originator-
1 bank account.
11. It was further part of the scheme that Individual-1 was not aware of
defendant SPITZER’s actions with respect to the preparation of the deeds
purporting to transfer ownership of the properties to an entity controlled by
defendant SPITZER, and Individual-1 did not authorize defendant SPITZER to
obtain mortgage loans secured by the 56th Street Properties.
12. It was further part of the scheme that Mortgage Lender-1 would not
have funded these mortgage loans had it known that Individual-1 did not authorize
the transfer of the 56 Street Properties to an entity controlled by defendant
SPITZER and did not authorize defendant SPITZER to obtain mortgage loans
secured by the 56th Street Properties.
13. It was further part of the scheme that defendant SPITZER caused the
56th Street mortgage loans to default by failing to make the required payments.
Execution of the Scheme to Defraud
14. For the purpose of executing and attempting to execute the scheme
and artifice to defraud, in Ocean County in the District of New Jersey, Kings
County in the Eastern District of New York, and elsewhere, defendant
ARTHUR SPITZER
did knowingly transmit and cause to be transmitted by means of wire communi
cation
in interstate and foreign commerce, certain writings, signs, signals, pictures, and
sounds, including a Fedwire funds transfer on or about August 28, 2019 from the
bank account of Settlement Company-1, through processing facilities in New Jersey
and Texas, to the bank account of BSD Realty Holdings Inc.
In violation of Title 18, United States Code, Sections 1343 and 2.
COUNT 2
(Wire Fraud)
(Division Avenue)
1, Paragraph 1 of Count 1 of the Indictment is incorporated as if set forth
in full herein.
Background
2. At all times relevant to this Indictment:
a. Individual-2 was a resident of Brooklyn, New York. Individual-
2 owned and resided in an apartment in a building located on Division Avenue in
Brooklyn, New York (the “Division Avenue Property”).
The Scheme
3. In or about August 2019, in Ocean County in the District of New
Jersey, Kings County in the Eastern District of New York, and elsewhere,
defendant
ARTHUR SPITZER
did knowingly and intentionally devise and execute a scheme and artifice to defraud
Individual-2 and Mortgage Lender-1, and to obtain money and property by means of
materially false and fraudulent pretenses, representations, and promises, which
scheme and artifice was in substance as set forth below.
Object of the Scheme
A, The object of the scheme was for defendant ARTHUR SPITZER to
financially enrich himself and satisfy outstanding debts by fraudulently obtaining a
mortgage loan secured by a real estate property that he did not have authority to
use as collateral for the mortgage loan.
10
Manner and Means of the Scheme
5. It was part of the scheme that Individual-2 purchased the Division
Avenue Property in or about 2001. There was no mortgage loan on the Division
Avenue Property in 2019.
6. It was further part of the scheme that in or around September 2019,
defendant SPITZER created an entity (the “Division Avenue LLC”) of which
defendant SPITZER was the sole member.
7. It was further part of the scheme that in or around September 2019,
defendant SPITZER caused Individual-2 to sign a deed transferring ownership of
the Division Avenue Property from Individual-2 to the Division Avenue LLC.
8. It was further part of the scheme that in or around September 2019,
defendant SPITZER, through the Division Avenue LLC, applied for and obtained a
$997,500 mortgage loan from Mortgage Lender-1 that was secured by the Division
Avenue Property. Settlement Company-1 served as settlement agent for the
Division Avenue mortgage transaction. Settlement Company-1 employees were
located in New Jersey when they worked on the Division Avenue mortgage
transaction and the mortgage was notarized by a Settlement Company-1 employee
in New Jersey.
9. It was further part of the scheme that on or about September 27, 2020,
Mortgage Lender-1 wired the mortgage proceeds via interstate wire, through the
Fedwire system, to Settlement Company-1’s escrow account.
10. It was further part of the scheme that Settlement Company-1 wired
approximately $500,000 of the Division Avenue mortgage loan from its escrow
11
account to a bank account at Bank-1 in the name of BSD Realty Holdings, Inc.,
which was controlled by defendant SPITZER, as set forth in the following table:
Approxim
Date
ateoof | oes
Approxim ate 8 |
Amount
===—————SsSdDescription. LMS
9/27/2019 $400,000.00 Interstate wire, sent through the Fedwire
system, from Settlement Company-1’s escrow
account to the BSD Realty Holdings, Inc. bank
account.
9/27/2019 $100,000.00 Interstate wire, sent through the Fedwire
system, from Settlement Company-1’s escrow
account to the BSD Realty Holdings, Inc. bank
account,
11. It was further part of the scheme that Settlement Company-1 applied
approximately $420,500 of the Division Avenue proceeds towards defendant
SPITZER’s purchase of another real estate property.
12. It was further part of the scheme that Individual-2 did not authorize
defendant SPITZER to obtain a $997,500 mortgage loan secured by the Division
Avenue Property.
18. It was further part of the scheme that Mortgage Lender-1 would not
have funded this mortgage loan had it known that Individual-2 did not authorize
defendant SPITZER to obtain a $997,500 mortgage loan secured by the Division
Avenue Property.
14. It was further part of the scheme that defendant SPITZER caused the
Division Avenue mortgage loan to default by not making the required payments.
12
Execution of the Scheme to Defraud
15. For the purpose of executing and attempting to execute the scheme
and artifice to defraud, in Ocean County in the District of New Jersey, Kings
County in the Eastern District of New York, and elsewhere, defendant
ARTHUR SPITZER
did knowingly transmit and cause to be transmitted by means of wire communication
in interstate and foreign commerce, certain writings, signs, signals, pictures, and
sounds, including a Fedwire funds transfer on or about September 27, 2019 from the
bank account of Settlement Company-1, through processing facilities in New Jersey
and Texas, to the bank account of BSD Realty Holdings Inc.
In violation of Title 18, United States Code, Sections 1343 and 2.
13
COUNT 8
(Wire Fraud)
USM Holdings —- Company-1 loan)
1, Paragraph 1 of Count 1 of the Indictment is incorporated as if set forth
in full herein.
2. At all times relevant to the Indictment:
a. ISM Holdings LLC was a New Jersey company.
b. The “ISM Properties” were a set of 15 residential buildings
located in Sicklerville, New Jersey, Newark, New Jersey, and Irvington, New
Jersey.
C. Company-1 was a New Jersey company owned by Individual-3.
The Scheme to Defraud
3. In or about December 2019, in Camden, Essex, and Ocean Counties in
the District of New Jersey, and elsewhere, defendant
ARTHUR SPITZER
did knowingly and intentionally devise and execute a scheme and artifice to defraud
Individual-4, and to obtain money and property by means of materially false and
fraudulent pretenses, representations, and promises, which scheme and artifice was
in substance as set forth below.
Object of the Scheme
4A, The object of the scheme was for defendant ARTHUR SPITZER to
financially enrich himself and satisfy outstanding debts by fraudulently obtaining a
mortgage loan secured by real estate properties that he did not have authority to
use as collateral for the mortgage loan.
14
Manner and Means of the Scheme
5. It was part of the scheme that in or around March 20 19, ISM Holdings
LLC purchased the ISM Properties. The purchase price of approximately
$3,900,000 was comprised of approximately $875,000 from Individual-4 and
approximately $3,100,000 in mortgage loans.
6. It was further part of the scheme that the operating agreement for
ISM Holdings LLC provided that the only members of ISM Holdings LLC were
Individual-4 and Individual-5. Under the terms of the operating agreement,
Individual-4’s consent was needed before any member could assign his membership
interest and before obtaining any mortgage loan secured by the ISM Properties.
7. It was further part of the scheme that in or around December 2019,
defendant SPITZER, purportedly acting as managing member of ISM Holdings
LLC, obtained a mortgage loan of approximately $400,000 from Individual-3,
secured by the ISM Properties. Documents reflecting a $400,000 mortgage loan
between Company-1 and ISM Holdings LLC were notarized and recorded by a
Settlement Company-1 employee in New Jersey.
8. It was further part of the scheme that on or about December 26, 2019,
Settlement Company-1 deposited into its escrow account a check in the approximate
amount of $388,000 with the notation “loan spitzer.” Settlement Company-1 then
wired approximately $365,000 of the loan proceeds from its escrow account to a
bank account in the name of BSD Realty Holdings, Inc., which was controlled by
defendant SPITZER as follows:
15
Approximate
Pa “Date
| Approximate ~ Pos
fe ope “Amount
| SS
Description
aaa es pts
12/26/2019 $42,938.79 Interstate wire, sent through the Fedwire
system, from Settlement Company-1’s escrow
account to the BSD Realty Holdings, Inc. bank
account.
12/26/2019 $57,350.04 Interstate wire, sent through the Fedwire
system, from Settlement Company-1’s escrow
account to the BSD Realty Holdings, Inc. bank
account.
12/27/2019 $265,000.00 Interstate wire, sent through the Fedwire
system, from Settlement Company-1’s escrow
account to the BSD Realty Holdings, Inc. bank
account.
9, It was further part of the scheme that Individual-4 was not aware of
defendant SPITZER’s actions and did not authorize defendant SPITZER to obtain a
mortgage secured by the ISM Properties.
10. It was further part of the scheme that Company-1 would not have
funded this mortgage loan had it known that Individual-4’s authorization was
required for ISM Holdings to obtain a mortgage loan and that Individual-4 did not
know about or authorize defendant Spitzer to obtain this mortgage loan.
Execution of the Scheme to Defraud
11. For the purpose of executing and attempting to execute the scheme
and artifice to defraud, in Camden, Essex, and Ocean Counties in the District of
New Jersey, and elsewhere, defendant
ARTHUR SPITZER
did knowingly transmit and cause to be transmitted by means of wire communication
in interstate and foreign commerce, certain writings, signs, signals, pictures, and
sounds, including a Fedwire funds transfer on or about December 27, 2019 from the
16
bank account of Settlement Company-1, through processing facilities in New Jersey
and Texas, to the bank account of BSD Realty Holdings Inc.
In violation of Title 18, United States Code, Sections 1848 and 2.
17
COUNT 4
(Wire Fraud)
USM Holdings — Refinance)
1. Paragraph 1 of Count 1 of the Indictment, paragraph 2 of Count 2 of
the Indictment, and paragraphs 1 through 10 of Count 8 of the Indictment are
incorporated as if set forth in full herein.
2. At all times relevant to the Indictment:
a. Mortgage Originator-2 was a mortgage originator that
originated loans for Mortgage Lender-1.
b. Settlement Company-2 was a title and real estate settlement
company located in Lakewood, New Jersey.
The Scheme to Defraud
3. In or about February 2020, in Camden, Essex, and Ocean Counties in
the District of New Jersey, and elsewhere, defendant
ARTHUR SPITZER
did knowingly and intentionally devise and execute a scheme and artifice to defraud
Individual-4 and Mortgage Lender-1, and to obtain money and property by means of
materially false and fraudulent pretenses, representations, and promises, which
scheme and artifice was in substance as set forth below.
Object of the Scheme
4, The object of the scheme was for defendant ARTHUR SPITZER to
financially enrich himself and satisfy outstanding debts by fraudulently obtaining
mortgage loans secured by real estate properties that he did not have authority to
use as collateral for the mortgage loans.
18
Manner and Means of the Scheme
5. It was part of the scheme that defendant SPITZER, using Individual-
2’s name, applied for mortgage loans secured by the ISM Properties.
6. It was further part of the scheme that defendant SPITZER used a fake
document purporting to assign Individual-4’s and Individual-5’s membership in ISM
Holdings LLC to Individual-2 and defendant SPITZER. The document purporting
to transfer membership to Individual-2 and defendant SPITZER contained the
forged signature of one of the actual LLC members, Individual-4.
7, It was further part of the scheme that in or around February 2020,
defendant SPITZER caused Individual-2 to sign documents enabling ISM Holdings
LLC to obtain mortgage loans totaling approximately $4,000,000 through mortgage
originator Mortgage Originator-2 and Mortgage Lender-1. These mortgage loans
were secured by the ISM Properties. At the time he signed these documents,
Individual-2 was not aware of the nature of the documents or that he was signing
documents to obtain a mortgage loan on a property that neither he nor defendant
SPITZER legitimately owned.
8. It was further part of the scheme that Settlement Company-2 served
as settlement agent for these mortgage loans. Settlement Company-2 employees
were located in New Jersey when they worked on the ISM Holdings transaction.
9, It was further part of the scheme that, after paying off the existing
mortgage loans on the ISM Properties, Settlement Company-2 wired approximately
$370,000 of the mortgage loan proceeds from its escrow account to a bank account
19
at Bank-1 in the name of BSD Realty Holdings, Inc., which was controlled by
defendant SPITZER as follows:
Approximate
“Date . ‘Approximate —
2/25/2020 $200,000.00 Interstate wire, sent through the Fedwire
system, from Settlement Company-2’s escrow
account to the BSD Realty Holdings, Inc. bank
account,
2/26/2020 $20,000.00 Interstate wire, sent through the Fedwire
system, from Settlement Company-2’s escrow
account to the BSD Realty Holdings, Inc. bank
account.
2/26/2020 $50,000.00 Interstate wire, sent through the Fedwire
system, from Settlement Company-2’s escrow
account to the BSD Realty Holdings, Inc. bank
account.
2/27/2020 $100,000.00 Interstate wire, sent through the Fedwire
system, from Settlement Company-2’s escrow
account to the BSD Realty Holdings, Inc. bank
account.
10. It was further part of the scheme that Individual-4 did not actually
transfer membership of ISM Holdings LLC to defendant SPITZER and Individual-2,
and was not aware of, and did not authorize defendant SPITZER to obtain,
mortgage loans secured by the ISM Properties.
11. It was further part of the scheme that Mortgage Lender-1 would not
have funded these mortgage loans had it known that Individual-4’s signature on the
purported assignment was forged and that Individual-4 did not authorize defendant
SPITZER to obtain mortgage loans secured by the ISM Properties.
12. It was further part of the scheme that defendant SPITZER caused the
ISM Properties mortgage loans to default by not making the required payments.
20
Execution of the Scheme to Defraud
13. For the purpose of executing and attempting to execute the scheme
and artifice to defraud, in Camden, Essex, and Ocean Counties in the District
of
New Jersey, and elsewhere, defendant
ARTHUR SPITZER
_ did knowingly transmit and cause to be transmitted by means of wire communication
in interstate and foreign commerce, certain writings, signs, signals, pictures, and
sounds, including a Fedwire funds transfer on or about February 25, 2020, from the
bank account of Settlement Company-2, through processing facilities in New Jersey
and Texas, to the bank account of BSD Realty Holdings Inc.
In violation of Title 18, United States Code, Sections 1343 and 2.
21
COUNT 5
(Aggravated Identity Theft)
(ISM Properties)
1. Paragraph 1 of Count 1 of the Indictment, paragraphs 1 through 11 of
Count 3 of the Indictment, and paragraphs 1 through 138 of Count 4 of the
Indictment are incorporated as if set forth in full herein.
2. In or about February 2020, in Camden, Essex, and Ocean Counties in
the District of New Jersey, and elsewhere, defendant
ARTHUR SPITZER
did knowingly transfer, possess, and use, without lawful authority, a means of
identification of another person, that is, the name and signature of Individual-4,
during and in relation to a felony violation of provisions contained in Chapter 68 of
Title 18, namely, wire fraud, contrary to 18 U.S.C. § 1343 as charged in Count 4 of
this Indictment, knowing that the means of identification belonged to said other
person.
In violation of Title 18, United States Code, Sections 1028A(a)(1) and 2.
22,
COUNT 6
(Conspiracy to Commit Wire and Bank Fraud)
(Malcolm X Properties)
1. Paragraph 1 of Count 1 of the Indictment is incorporated as if set forth
in full herein.
2. At all times relevant to this Indictment:
a. Defendant MENDEL DEUTSCH was a resident of Toms River,
New Jersey.
b. Defendant JOSHUA FELDBERGER was a resident of
Lakewood, New Jersey. Defendant JOSHUA FELDBERGER owned Settlement
Company-2, a title and real estate settlement company located in Lakewood, New
Jersey.
c, 806 Malcolm NY LLC was a New York entity controlled by
defendant DEUTSCH (the “DEUTSCH LLC”),
d. The “Malcolm X Properties” were three mixed-use commercial
and residential buildings located 6n Malcolm X Boulevard in Brooklyn, New York.
e. Bank-2 was engaged in the business of making mortgage loans
and therefore was a “financial institution” within the meaning of Title 18, United
States Code, Section 20.
f. Bank-3 was a “financial institution” within the meaning of Title
18, United States Code, Section 20.
g. Deutsche Equity LLC was a New York company controlled by
defendant DEUTSCH. Deutsche Equity LLC had a bank account at Bank-3, whose
sole signatory was defendant DEUTSCH.
23
h. Company-2 was a New York limited liability company.
i, Individual-6 was a resident of New York.
The Conspiracy
3. From in or about November 2019 through in or about J uly 2020, in
Ocean County in the District of New Jersey, and elsewhere, defendants
ARTHUR SPITZER, MENDEL DEUTSCH,
and JOSHUA FELDBERGER
did knowingly and intentionally conspire to commit certain offenses, namely:
a. To devise a scheme and artifice to defraud Company-2 and Bank-2, and to
obtain money and property by means of materially false and fraudulent
pretenses, representations, and promises, and, for the purpose of executing
and attempting to execute such scheme and artifice to defraud, did transmit
and cause to be transmitted by means of wire communications in interstate
and foreign commerce, certain writings, signs, signals, pictures, and sounds,
contrary to Title 18, United States Code, Section 1343; and
b. To execute and attempt to execute a scheme and artifice to defraud a
financial institution, Bank-2, and to obtain moneys, funds, credits, assets,
securities, and other property owned by, and under the custody and control
of, Bank-2, by means of materially false and fraudulent pretenses,
representations, and promises, contrary to Title 18, United States Code,
Section 1844.
Object of the Conspiracy
A, The object of the conspiracy was for defendants ARTHUR SPITZER,
MENDEL DEUTSCH, and JOSHUA FELDBERGER to financially enrich
themselves and satisfy outstanding debts by fraudulently obtaining a $4,500,000
mortgage loan from Bank-2 that was secured by the Malcolm X Properties.
Manner and Means of the Conspiracy
5. It was part of the conspiracy that in or around July 2019, 306A
"Malcolm X Blvd LLC, 306 Malcolm X Blvd LLC, and 308 Malcolm X Blvd LLC (the
24
“Malcolm X Blvd LLCs”), purchased the Malcolm X Properties. No mortgage loan
was obtained in connection with the purchase.
6, It was further part of the conspiracy that the operating agreements for
the Malcolm X Blvd LLCs provided that the sole member of each entity was
Company-2. The operating agreements further provided that Individual-6 was an
authorized signatory who was authorized only to execute documents in connection
with the July 2019 purchase of the Malcolm X Properties.
7. It was further part of the conspiracy that between in or about |
November 2019 and in or about March 2020, defendants ARTHUR SPITZER and
MENDEL DEUTSCH engaged in discussions with representatives of the Malcolm X
Blvd LLCs about purchasing the Malcolm X Properties from the Malcolm X Blvd
LLCs. These discussions did not result in any agreement to sell the Malcolm X
Properties to defendants SPITZER and DEUTSCH.
8. It was further part of the conspiracy that notwithstanding the lack of
agreement to sell the Malcolm X Properties to defendants SPITZER and
DEUTSCH, defendants SPITZER and DEUTSCH worked with defendant JOSHUA
FELDBERGER to devise and execute a scheme to obtain a mortgage loan secured
by the Malcolm X Properties by making it appear to Bank-2 as if defendant
SPITZER actually owned the Malcolm X Properties and that defendant SPITZER
had agreed to sell the Malcolm X Properties to an entity controlled by defendant
DEUTSCH (the DEUTSCH LLC).
25
9, It was further part of the conspiracy that defendant MENDEL
DEUTSCH, through the DEUTSCH LLC, applied for a mortgage loan from Bank-2
in connection with his purported purchase of the Malcolm X Properties.
10. It was further part of the conspiracy that defendants SPITZER and
DEUTSCH engaged Settlement Company-2 to be the title and settlement company
for the transaction conveying the Malcolm X Properties to the DEUTSCH LLC and
in which defendant DEUTSCH obtained a mortgage loan from Bank-2. Defendant
FELDBERGER oversaw Settlement Company-2’s activities in connection with this
transaction. Defendant FELDBERGER and other Settlement Company-2
employees were located in New Jersey when they worked on the Malcolm X
transaction.
11. It was further part of the conspiracy that defendants SPITZER and
DEUTSCH made or caused to be made material misrepresentations to Bank-2 in
connection with defendant DEUTSCH’s application for a mortgage loan secured by
the Malcolm X Properties. For example, between in or about January 2020 and in
or about June 2020, defendant FELDBERGER created and caused to be created
letters stating that defendant DEUTSCH already had deposited sizable funds into
Settlement Company-2’s escrow account to be used towards the purchase of real
estate properties. Defendants SPITZER and DEUTSCH caused these letters to be
sent to Bank-2 to support defendant DEUTSCH’s application for a mortgage loan
secured by the Malcolm X Properties. In fact, defendant DEUTSCH had not
deposited the stated funds into Settlement Company-2’s escrow account.
26
12. It was further part of the conspiracy that in or about June 2020,
defendant SPITZER signed documents on behalf of the Malcolm X Blvd LLCs to
obtain a short-term loan of more than $1,000,000. The loan documents were signed
by defendant SPITZER on behalf of the Malcolm X Blvd LLCs even though
defendant SPITZER was not a member of the Malcolm X Blvd LLCs and had no
authority to borrow money on behalf of the Malcolm X Blvd LLCs. The short-term
loan documents were notarized by defendant FELDBERGER.
13. It was further part of the conspiracy that defendants SPITZER,
DEUTSCH, and FELDBERGER caused to be created, and used, documents
containing the forged signature of Individual-6 to facilitate the transaction:
a. Onor about June 11, 2020, defendant DEUTSCH emailed a “time
of essence” letter to his mortgage broker, which was then forwarded
to Bank-2. The “time of essence” letter stated that the seller of the
Malcolm X Properties was ready to close the sale of the Malcolm X
Properties to defendant DEUTSCH. The “time of essence” letter
was purportedly signed by Individual-6 but was not actually signed
by Individual-6.
b. The defendants used a document, dated August 2019, purportedly
assigning membership in the Malcolm X Blvd LLCs from
Individual-6 to defendant SPITZER (the “Fake Assignment”). The
Fake Assignment made it appear as if defendant SPITZER owned
the Malcolm X Properties and therefore could “sell” the Malcolm X
Properties to defendant DEUTSCH. The Fake Assignment was not
27
actually signed by Individual-6 and was created not in August
2019, but rather, on a date after the Malcolm X transaction already
had closed.
14, It was further part of the conspiracy that according to the HUD-1
Settlement Statement, the purchase price for the purported sale of the Malcolm X
Properties from defendant SPITZER to defendant DEUTSCH was $6,000,000, the
amount of the loan from Bank-2 was $4,500,000, and defendant DEUTSCH was
required to bring approximately $2,300,000 to the closing.
16. It was further part of the conspiracy that on or about June 25, 2020,
defendant FELDBERGER caused a Settlement Company-2 employee to falsely state
in an email sent to a representative of Bank-2 that defendant DEUTSCH already
had provided the required funds to Settlement Company-2. Bank-2 then wired the
loan proceeds of approximately $4,061,368.47 to Settlement Company-2 on or about
June 25, 2020. In fact, Settlement Company-2 had not received the required funds
from defendant DEUTSCH on June 25, 2020.
16. ‘It was further part of the conspiracy that after Settlement Company-2
received the mortgage proceeds from Bank-2, the defendants engaged in a series of
monetary transactions that had the effect of allowing defendants SPITZER and
DEUTSCH to purchase the Malcolm X Properties and obtain the Bank-2 mortgage
loan without using any of their own money, as set forth below:
a. Onor about June 26, 2020, defendant FELDBERGER wired
approximately $1,000,000 of the Bank-2 mortgage proceeds to
defendant SPITZER’s company, BSD Realty Holdings, Inc. These
28
funds were then wired from BSD Realty Holdings, Inc. to defendant
DEUTSCH’s company, Deutsche Equity, which then sent them by
wire and check back to Settlement Company-2 as a portion of
defendant DEUTSCH’s approximately $2,300,000 down payment
for the same transaction for which the mortgage loan was being
obtained. Specifically, defendants SPITZER, DEUTSCH, and
FELDBERGER engaged in the following monetary transactions:
6/26/2020 _ $800,000 and Interstate wire, sent through the Fedwire
$200,000 system, from Settlement Company-2’s escrow
account at Bank-1 to defendant SPITZER’s
BSD Realty Holdings bank account at Bank-
1.
7/2/2020 $500,000, Interstate wire, sent through the Fedwire
$300,000, and system, from defendant SPITZER’s BSD
$200,000 Realty Holdings bank account at Bank-1 to
defendant DEUTSCH’s Deutsche Equity
bank account at Bank-3.
7/2/2020 $300,000 and Interstate wire, sent through the Fedwire
$200,000 system, from defendant DEUTSCH’s
Deutsche Equity bank account at Bank-3 to
Settlement Company-2’s escrow account at
Bank-1.
7/2/2020 $411,348,80 Check from defendant DEUTSCH’s Deutsche
Kquity bank account at Bank-3, signed by
defendant DEUTSCH, and deposited into
Settlement Company-2’s escrow account at
Bank-1.
b. On or about July 2, 2020, defendants SPITZER and DEUTSCH
caused Individual-7 to wire the balance of defendant DEUTSCH’s
down payment—approximately $1,400,000—to Settlement
Company-2. On or about July 2, 2020, defendant FELDBERGER
29
wired a portion of the Bank-2 mortgage proceeds to BSD Realty
Holdings, Inc. Defendant SPITZER subsequently used these
mortgage proceeds to repay Individual-7. Specifically, defendants
SPITZER, DEUTSCH, and FELDBERGER engaged in the
following monetary transactions:
22 -Date = >| = Amount - WS SRE TP tied
7/2/2020 $1,400,000 Interstate wire, sent through the Fedwire
system, from Individual-7’s bank account at
.|Bank-3 to Settlement Company-2’s escrow
account at Bank-1.
7/2/2020 $1,000,000 and | Interstate wires, sent through the Fedwire
$1,250,000 system, from Settlement Company-2’s escrow
account at Bank-1 to defendant SPITZER’s
BSD Realty Holdings bank account at Bank-1.
7/3/2020; $260,000; Interstate wires, sent through the Fedwire
7/6/2020; $500,000; system, from defendant SPITZER’s BSD
7/24/2020; $50,000; $75,000 | Realty Holdings bank account at Bank-1 to
7/28/2020 Individual-7’s bank account at Bank-3.
17. It was further part of the conspiracy that the proceeds of the Bank-2
mortgage loan were disbursed for the benefit of defendants SPITZER, DEUTSCH,
and FELDBERGER. As described above, a significant portion of the Bank-2
mortgage proceeds were used to fund defendant DEUTSCH’s down payment.
Approximately $100,000 of the proceeds were disbursed to a relative of defendant
FELDBERGER to repay a loan he had made to defendant SPITZER. Most of the
remaining loan proceeds were disbursed to BSD Realty Holdings Inc, and used for
defendant SPITZER’s benefit.
18. It was further part of the conspiracy that defendants SPITZER,
DEUTSCH and FELDBERGER signed the HUD-1 Settlement Statement for the
30
Malcolm X transaction even though it did not disclose the material facts that more
than $1,000,000 of the funds were being disbursed to pay off the short-term loan,
that defendant DEUTSCH did not actually provide the required funds to close the
transaction on the closing date, and that defendant SPITZER did not actually own
the Malcolm X Properties. Bank-2 would not have approved and funded this
mortgage loan had it known these facts.
19. It was further part of the conspiracy that defendants SPITZER and
DEUTSCH caused the Bank-2 mortgage loan to default by failing to make the
required payments.
In violation of Title 18, United States Code, Section 1349.
31
COUNT 7
(Bank Fraud)
(Malcolm X Properties)
1. Paragraph 1 of Count 1 of the Indictment and paragraphs 1 through 19
of Count 6 of the Indictment are incorporated as if set forth in full herein.
2. From in or about November 2019 through in or about July 2020, in
Ocean County in the District of New Jersey, and elsewhere, defendants
ARTHUR SPITZER, MENDEL DEUTSCH,
and JOSHUA FELDBERGER
did knowingly and intentionally execute and attempt to execute a scheme and
artifice to defraud a financial institution, Bank-2, and to obtain moneys, funds,
credits, assets, securities, and other property owned by, and under the custody and
control of, Bank-2, by means of materially false and fraudulent pretenses,
representations, and promises, namely by causing Bank-2 to transmit
approximately $4,061,368.47 to Settlement Company-2 on or about June 25, 2020.
In violation of Title 18, United States Code, Sections 1344 and 2.
32
COUNT 8
(Wire Fraud)
(Malcolm X Properties)
1. Paragraph 1 of Count 1 of the Indictment and paragraphs 1 through 19
of Count 6 of the Indictment are incorporated as if set forth in full herein.
2. From in or about November 2019 through in or about July 2020, in
Ocean County in the District of New Jersey, and elsewhere, defendants
ARTHUR SPITZER, MENDEL DEUTSCH,
and JOSHUA FELDBERGER
did knowingly and intentionally devise and intend to devise a scheme and artifice to
defraud, and aid and abet the scheme and artifice to defraud Company-2 and Bank-
2, and to obtain money and property by means of materially false and fraudulent
pretenses, representations, and promises, and, for purposes of executing and
attempting to execute such scheme and artifice to defraud, did knowingly and
intentionally transmit and cause to be transmitted by means of wire
communications in interstate and foreign commerce certain writings, signs, signals,
pictures, and sounds, including a Fedwire funds transfer on or about June 25, 2020,
from Bank-2, through processing facilities in New Jersey and Texas, to the bank
account of Settlement Company-2.
In violation of Title 18, United States Code, Sections 1343 and 2.
33
COUNT 9
(Aggravated Identity Theft)
(Malcolm X Properties)
1. Paragraph 1 of Count 1 of the Indictment and paragraphs 1 through 19
of Count 6 of the Indictment are incorporated as if set forth in full herein.
2. From in or about June 2020 through in or about July 2020, in Ocean
County in the District of New Jersey, and elsewhere, defendants
ARTHUR SPITZER, MENDEL DEUTSCH,
and JOSHUA FELDBERGER
did knowingly transfer, possess, and use, without lawful authority, means of
identification of another person, that is, the name and signature of Individual-6,
during an in relation to felony violations of provisions contained in Chapter 63 of
Title 18, namely, bank and wire fraud conspiracy, bank fraud, and wire fraud,
contrary to 18 U.S.C. §§ 1343, 1344, and 1349, as charged in Counts 6, 7, and 8 of
this Indictment, knowing that the means of identification belonged to said other
person.
In violation of Title 18, United States Code, Sections 1028A(a)(1) and 2.
34
COUNT10
(False Statement)
(Malcolm X Properties)
1. Paragraph 1 of Count 1 of the Indictment and paragraphs 1 through 19
of Count 6 of the Indictment are incorporated as if set forth in full herein.
2. In or about June 2020, in Ocean County in the District of New Jersey,
and elsewhere, defendants
ARTHUR SPITZER, MENDEL DEUTSCH,
and JOSHUA FELDBERGER
did knowingly make and cause to be made a false statement and report for the
purpose of influencing Bank-2, an institution the accounts of which were insured by
the Federal Deposit Insurance Corporation; namely, the defendants signed and
caused to be submitted to Bank-2, in connection with a $4,500,000 mortgage loan
from Bank-2 related to a purported transfer of the Malcolm X Properties, a HUD-1
Settlement Statement that (a) omitted the fact that a portion of the mortgage loan
proceeds were being used to pay off an existing loan; (b) falsely stated that
defendant DEUTSCH had provided approximately $2,300,000 of his own, non-
mortgage loan funds at closing; and (c) falsely implied that defendant SPITZER was
authorized to sell the Malcolm X Properties.
In violation of Title 18, United States Code, Sections 1014 and 2.
35
COUNT 11
(Wire Fraud)
(Company-3 loan)
1. Paragraph 1 of Count 1 of the Indictment and paragraphs 1 through 19
of Count 6 of the Indictment are incorporated as if set forth in full herein.
2. At all times relevant to this Indictment:
a. Individual-8 was a resident of Brooklyn, New York. Individual-
8 owned and resided in a building located on Bedford Avenue in Brooklyn, New
York (the “Bedford Avenue Property”).
b. The Bedford Avenue Property was owned by a limited liability
company (the “Bedford Avenue LLC”). The managing members of the Bedford
Avenue LLC were Individual-8 and Individual-8’s spouse.
C. Company-3 was a Florida company.
d. Settlement Company-3 was a title and real estate settlement
company located in Brooklyn, New York.
The Scheme
3. From in or about August 2020 through in or about September 2020, in
Kings County in the Kastern District of New York, the District of New Jersey, and
elsewhere, defendant
ARTHUR SPITZER
did knowingly and intentionally devise and execute a scheme and artifice to defraud
Company-2, Company-3, and Individual-8, and to obtain money and property by
means of materially false and fraudulent pretenses, representations, and promises,
which scheme and artifice was in substance as set forth below.
36
Object of the Scheme
4, The object of the scheme was for defendant ARTHUR SPITZER to
financially enrich himself and satisfy outstanding debts by fraudulently obtaining a
mortgage loan secured by real estate properties that he did not have authority to
use as collateral for the mortgage loan.
Manner and Means of the Scheme
5. It was part of the scheme that in or about July 2020, a representative
of Company-2 learned that the Malcolm X Properties had been conveyed to
defendant DEUTSCH without authorization and that the unauthorized Bank-2
mortgage loan had been obtained. In or about August 2020, defendant DEUTSCH
assigned his interest in the DEUTSCH LLC to Company-2.
6. It was further part of the scheme that in or about September 2020,
defendant SPITZER, purportedly acting as an authorized signatory of the
DEUTSCH LLC and the Bedford Avenue LLC, obtained a loan of approximately
$1,000,000 from Company-3 that was secured by the Malcolm X Properties and the
Bedford Avenue Property.
7. It was further part of the scheme that Settlement Company-3 served
as settlement agent for the Company-3 mortgage transaction. On or about
September 29, 2020, approximately $940,000 was wired in interstate commerce
using the Fedwire system, from a bank account controlled by Company-3 to
Settlement Company-3’s escrow account.
8, It was further part of the scheme that the Company-3 loan proceeds
were disbursed by interstate wires, sent through the Fedwire system, for defendant
37
SPITZER’s benefit or to satisfy defendant SPITZER’s outstanding debts.
None of
the mortgage proceeds were disbursed to Individual-8 or Company-2.
9. It was further part of the scheme that defendant SPITZER was not a
member of the DEUTSCH LLC or the Bedford Avenue LLC, and neither Individual-
8 nor Company-2 authorized defendant SPITZER to obtain a mortgage loan secured
by the Malcolm X Properties and the Bedford Avenue Property.
10. It was further part of the scheme that Company-3 would not have
funded this mortgage loans had it known that Individual-8 and Company-2 did not
authorize defendant SPITZER to obtain a mortgage loan secured by these
properties.
11. It was further part of the scheme that defendant SPITZER caused the
Company-3 mortgage loan to default by not making the required payments.
Execution of the Scheme to Defraud
12. For the purpose of executing and attempting to execute the scheme
and artifice to defraud, in Ocean County in the District of New Jersey, Kings
County in the Eastern District of New York, and elsewhere, defendant
ARTHUR SPITZER
did knowingly transmit and cause to be transmitted by means of wire communication
in interstate and foreign commerce, certain writings, signs, signals, pictures, and
sounds, including a Fedwire funds transfer on or about September 29, 2020 from the
bank account of Company-3, through processing facilities in New Jersey and Texas,
to the bank account of Settlement Company-3.
In violation of Title 18, United States Code, Sections 1343 and 2.
388
COUNTS 12-19
(Money Laundering by Transacting in Criminal Proceeds)
(Fraudulent mortgage proceeds - Spitzer)
1. Counts 1 through 11 of the Indictment are incorporated as if set forth
in full herein. |
2. At all times relevant to this Indictment:
a. Company-4 was a New York limited liability company.
b. Company-5 was a New Jersey limited liability company.
c. Bank-4 was a “financial institution” within the meaning of Title
18, United States Code, Section 20.
3. On or about the dates set forth in the table below, in the District of
New Jersey and elsewhere, the defendant,
ARTHUR SPITZER,
did knowingly engage and attempt to engage in monetary transactions by, through,
and to a financial institution, affecting interstate and foreign commerce, in
criminally derived property of a value greater than $10,000, as set forth in the table
below, such property having been derived from a specified unlawful activity, that is,
wire fraud in violation of Title 18, United States Code, Section 1343, bank fraud in
violation of Title 18, United States Code, Section 1344, and bank and wire fraud
conspiracy in violation of Title 18, United States Code, Section 1849, each monetary
transaction constituting a separate count:
Approximate | —_—_— Descriptio
of Monetary
n
“Date fo
12 8/29/2019 $50,000.00 interstate wire, sent through the Fedwire
system, consisting of proceeds from the 56 Street
mortgage loan charged in Count 1 of the Indictment,
39
from defendant SPITZER’s BSD Realty Holdings bank
account at Bank-1 to defendant DEUTSCH’s Deutsche
Equity bank account at Bank-3.
18 8/29/2019 $201,000.00 interstate wire, sent through the Fedwire
system, consisting of proceeds from the 56% Street
mortgage loan charged in Count 1 of the Indictment,
from defendant SPITZER’s BSD Realty Holdings bank
account at Bank-1 to a bank account controlled by
Individual-7 at Bank-3.
14 9/27/2019 $300,000.00 interstate wire, sent through the Fedwire
system, consisting of proceeds from the Division
Avenue mortgage loan charged in Count 2 of the
Indictment, from defendant SPITZER’s BSD Realty
Holdings bank account at Bank-1 to a bank account in
the name of Company-4 at Bank-3.
15 12/27/2019 $130,000.00 interstate wire, sent through the Fedwire
system, consisting of proceeds from the ISM Holdings
LLC mortgage loan charged in Count 8 of the
Indictment, from defendant SPITZER’s BSD Realty
Holdings bank account at Bank-1 to a bank account in
the name of Company-5 at Bank-1.
16 2/25/2020 $45,500.00 interstate wire, sent through the Fedwire
system, consisting of proceeds from the ISM Holdings
LLC mortgage loan charged in Count 4 of the
Indictment, from defendant SPITZER’s BSD Realty
Holdings bank account at Bank-1 to a bank account in
the name of Company-5 at Bank-1.
17 2/27/2020 $100,000.00 interstate wire, sent through the Fedwire
system, consisting of proceeds from the ISM Holdings
LLC mortgage loan charged in Count 4 of the
Indictment, from defendant SPITZER’s BSD Realty
Holdings bank account at Bank-1 to defendant
DEUTSCH’s Deutsche Equity bank account at Bank-3.
18 7/2/2020 $100,000.00 interstate wire, sent through the Fedwire
system, consisting of proceeds from the Malcolm X
Properties mortgage loan charged in Counts 6-10 of the
Indictment, from defendant SPITZER’s BSD Realty
Holdings bank account at Bank-1 to the Company-1
bank account at Bank-4,
40
19 7/6/2020 $100,000.00 interstate wire, sent through the Fedwire
system, consisting of proceeds from the Malcolm X
Properties mortgage loan charged in Counts 6-10 of the
Indictment, from defendant SPITZER’s BSD Realty
Holdings bank account at Bank-1 to the Company-1
bank account at Bank-4.
In violation of Title 18, United States Code, Sections 1957(a) and 2.
41
COUNTS 20-21
(Wire Fraud)
(EIDL loans - Spitzer’)
1. Paragraphs 1 through 13 of Count 1 of the Indictment are incorporated
as if set forth in full herein.
2. At all times relevant to the Indictment:
a. Bank-6 was a “financial institution” within the meaning of Title
18, United States Code, Section 20.
b. The U.S. Small Business Administration (“SBA”) was an
independent agency of the federal government created to aid, counsel, assist, and
protect the interests of small business concerns, preserve free competitive
enterprise, and maintain and strengthen the overall economy of the United States.
C. The EIDL program was an SBA program that provided low-
interest financing to small businesses, renters, and homeowners in regions affected
by declared disasters.
d. The Coronavirus Aid, Relief, and Economic Security (“CARES”)
Act was a federal law enacted in or about March 2020 and was designed to provide
emergency financial assistance to millions of Americans suffering economic effects
caused by the COVID-19 pandemic.
e. The CARES Act authorized the SBA to provide EIDLs of up to
$2 million to eligible small businesses that were experiencing substantial financial
disruption due to the COVID-19 pandemic.
f. To obtain an KIDL, a qualifying business was required to submit
an application to the SBA and provide information about its operations, such as the
42
number of employees, gross revenues for the 12-month period preceding the
disaster, and cost of goods sold in the 12-month period preceding the disaster, In
addition, the business entity must have been in operation on February 1, 2020.
g. The amount of the EIDL was determined based, in part, on the
information provided by the applicant regarding the revenue, employees, and cost of
goods of the business. The SBA directly issued any funds disbursed under an EIDL
to the applicant business. A business was permitted to use EIDL funds for payroll
expenses, sick leave, production costs, and business obligations such as debts, rent,
and mortgage payments.
The Scheme
3. From in or about June 2020 through at least as late as November
2020, defendant SPITZER devised and intended to devise a scheme to defraud the
SBA, and to obtain federal COVID-19 emergency relief monies by means of
materially false and fraudulent pretenses, representations and promises.
Object of the Scheme
4, The object of the scheme was for defendant SPITZER to financially
enrich himself by obtaining EIDL loans that were intended for small businesses
distressed by the COVID-19 pandemic, through the submission of fraudulent loan
applications to the SBA that included false statements about the applicant
companies’ gross revenues, cost of goods sold, and lost rents.
Manner and Means of the Scheme
5. It was part of the scheme that defendant SPITZER submitted and
caused to be submitted approximately two dozen EIDL loan applications. The loan
43
applications contained materially false and fraudulent information about one or
more of the following data points: the company’s number of employees, gross
revenues, cost of goods sold, and lost rents due to the COVID-19 pandemic.
6. It was further part of the scheme that based on the materially false
information, the SBA approved approximately 15 EIDL loans.
7. It was further part of the scheme that some of the EIDL applications
or loan agreements were electronically signed and submitted to the SBA from New
Jersey.
8, It was further part of the scheme that after approving the EIDLs, the
SBA disbursed the loan proceeds into bank accounts maintained by defendant
SPITZER. Many of the EIDL loans that the SBA approved based on loan
applications that defendant SPITZER caused to be submitted were funded via
Automated Clearing House (ACH) payments sent from the SBA’s facility in a state
other than New Jersey, through a facility in New Jersey, to bank accounts
controlled by defendant SPITZER.
9, It was further part of the scheme that as a result of his fraudulent
applications, defendant SPITZER unlawfully obtained more than.$1,500,000 in
federal COVID-19 emergency relief money.
56% Street LLC EIDL Loan
10. It was further part of the scheme that on or about August 9, 2020,
defendant SPITZER applied for an EIDL loan on behalf of the 56 Street LLC. The
56th Street EIDL application stated that the 56th Street LLC had 8 employees, gross
44
revenues of $749,875 for the 12 months prior to the disaster, and lost rents due to
the disaster of $690,120.
11. It was further part of the scheme that the information defendant
SPITZER caused to be provided to the SBA on the 56 Street EIDL application was
false and fraudulent. The 56% Street LLC was a company formed by defendant
SPITZER in or around August 2019 to hold the 56‘ Street Properties and to apply
for unauthorized mortgages secured by the 56 Street Properties. The 66t Street
LLC did not have any employees, had no revenue (apart from the fraudulent
mortgage proceeds), and no rents were ever paid to the 56 Street LLC. The 56th
Street LLC bank account at Bank-5 was not opened until July 23, 2020, shortly
before defendant SPITZER applied for the EIDL loan.
12. It was further part of the scheme that in or around November 2020,
based on the fraudulent application, SBA approved the 56th Street EIDL loan in the
amount of $150,000.
18. It was further part of the scheme that in or around November 2020, in
Jersey City, New Jersey, defendant SPITZER electronically signed, or caused to be
electronically signed, a Loan Authorization and Agreement on behalf of the 56%
Street LLC certifying that “[a]ll representations in the Borrower’s Loan application
(including all supplementary submissions) are true, correct and complete and are
offered to induce SBA to make this Loan.”
14. It was further part of the scheme that in or around November 2020,
the SBA disbursed approximately $149,900 into a Bank-5 account in the name of
the 56‘ Street LLC, which was controlled by defendant SPITZER.
45
188 Nobility LLC EIDL Loan
15. It was further part of the scheme that on or about August 17, 2020,
defendant SPITZER applied for an EIDL loan on behalf of 138 Nobility LLC. The
138 Nobility LLC EIDL application stated that 188 Nobility LLC had 3 employees,
gross revenues of $185,500 for the 12 months prior to the disaster, and lost rents
due to the disaster of $163,200,
16. It was further part of the scheme that the information that defendant
SPITZER caused to be provided to the SBA on the 188 Nobility LLC EIDL
application was false and fraudulent. 138 Nobility LLC was a company formed by
defendant SPITZER in or around August 2019 to hold a single-family residence in
Toms River, New Jersey. 138 Nobility LLC did not have any employees, had no
revenue, and no rents were ever paid to 188 Nobility LLC. The 138 Nobility LLC
bank account at Bank-5 was not opened until July 23, 2020, shortly before applying
for the EIDL loan,
17. It was further part of the scheme that in or around November 2020,
based on the fraudulent application, SBA approved the 188 Nobility LLC EIDL loan
in the amount of $150,000.
18. It was further part of the scheme that in or around November 2020, in
Jersey City, New Jersey, defendant SPITZER electronically signed, or caused to be
electronically signed, a Loan Authorization and Agreement on behalf of 138 Nobility
LLC certifying that “[a]ll representations in the Borrower’s Loan application
(including all supplementary submissions) are true, correct and complete and are
offered to induce SBA to make this Loan.”
46
19. It was further part of the scheme that in or around November 2020,
the SBA disbursed approximately $149,900 into a Bank-5 account in the name of
138 Nobility LLC, which was controlled by defendant SPITZER.
Execution of the Scheme
20. On or about the dates set forth below, in the District of New Jersey
and elsewhere, defendant,
ARTHUR SPITZER,
for the purpose of executing the scheme described above, transmitted and caused to
be transmitted by means of wire communications in interstate commerce the
writings, signs, and signals described below for each count, each transmission
constituting a separate count:
20 11/10/2020 An electronic transfer of approximately $149,900 from
the SBA to a Bank-5 account in the name of the 56%
Street LLC that traveled through the States of New
Jersey and Maine.
21 11/10/2020 An electronic transfer of approximately $149,900 from
the SBA to a Bank-5 account in the name of 138
Nobility LLC that traveled through the States of New
Jersey and Maine.
In violation of Title 18, United States Code, Sections 1343 and 2.
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COUNTS 22-26
(Money Laundering by Transacting in Criminal Proceeds)
(EIDL loans - Spitzer)
1. Paragraphs 1 through 18 of Count 1 of the Indictment and paragraphs
1 through 20 of Counts 20-21 of the Indictment are incorporated as if set forth in
full herein.
2. On or about the dates set forth in the table below, in the District of
New Jersey and elsewhere, defendant,
ARTHUR SPITZER,
did knowingly engage and attempt to engage in monetary transactions by, through,
and to a financial institution, affecting interstate and foreign commerce, in
criminally derived property of a value greater than $10,000, as set forth in the table
below, such property having been derived from a specified unlawful activity, that is,
wire fraud in violation of Title 18, United States Code, Section 1348, each monetary
transaction constituting a separate count:
Approximate| Description of Monetary. Transaction
22 11/12/2020 An electronic transfer of approximately $100,000 of the
proceeds from the 56 Street LLC EIDL loan from the
Bank-5 account in the name of the 56th Street LLC to a
Bank-5 account in the name of defendant SPITZER and
defendant SPITZER’s spouse.
23 11/12/2020 An electronic transfer of approximately $45,000 of the
proceeds from the 56% Street LLC EIDL loan from the
Bank-5 account in the name of the 56 Street LLC to a
Bank-5 account in the name of ZTS Express Inc.
24 11/12/2020 An electronic transfer of approximately $100,000 of the
proceeds from the 138 Nobility LLC EIDL loan from the
Bank-5 account in the name of 138 Nobility LLC to a
Bank-5 account in the name of ZTS Express Inc.
25 11/12/2020 An electronic transfer of approximately $25,000 of the
proceeds from the 138 Nobility LLC EIDL loan from the
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Bank-5 account in the name of 188 Nobility LLC to a
Bank-5 account in the name of ZTS Express Inc.
26 11/12/2020 An electronic transfer of approximately $20,000 of the
proceeds from the 188 Nobility LLC EIDL loan from the
Bank-5 account in the name of 188 Nobility LLC to a
Bank-5 account in the name of ZTS Express Inc.
In violation of Title 18, United States Code, Sections 1957(a) and 2.
49
COUNTS 27-28
(Wire Fraud)
(EIDL loans - Deutsch)
1, Paragraphs 1 and 2 of Counts 20-21 of the Indictment are incorporated
as if set forth in full herein.
The Scheme
2. From in or about June 2020 through at least as late as November
2020, defendant DEUTSCH devised and intended to devise a scheme to defraud the
SBA, and to obtain federal COVID-19 emergency relief monies by means of
materially false and fraudulent pretenses, representations and promises.
Object of the Scheme
3. The object of the scheme was for defendant DEUTSCH to financially
enrich himself by obtaining EIDL loans that were intended for small businesses
distressed by the COVID-19 pandemic, through the submission of fraudulent loan
applications to the SBA that included false statements about the applicant
companies’ gross revenues, cost of goods sold, and lost rents.
Manner and Means of the Scheme
4, It was part of the scheme that defendant DEUTSCH submitted and
caused to be submitted more than one dozen EIDL loan applications. The loan
applications contained materially false and fraudulent information about one or
more of the following data points: the company’s number of employees, gross
revenues, cost of goods sold, and lost rents due to the COVID-19 pandemic.
50
5. It was further part of the scheme that based on the materially false
information, the SBA approved approximately 15 EIDL loans for defendant
DEUTSCH’s companies.
6. It was further part of the scheme that after approving the EIDLs, the
SBA disbursed the loan proceeds into bank accounts maintained by defendant
DEUTSCH.
7. It was further part of the scheme that as a result of the fraudulent
applications, defendant DEUTSCH unlawfully obtained more than $1,800,000 in
federal COVID-19 emergency relief money.
Blancke Street LLC EIDL Loan
8. It was further part of the scheme that on or about September 2, 2020,
defendant DEUTSCH applied for an EIDL loan on behalf of 1500 West Blancke
Street LLC. The 1500 West Blancke Street LLC EIDL application falsely stated
that 1500 West Blancke Street LLC had gross revenues of $378,000 for the 12
months prior to the disaster, and cost of goods sold of $65,000 for the 12 months
prior to the disaster. The actual revenue and cost of goods sold for 1500 West
Blancke Street LLC was significantly lower than the amounts stated on the EIDL
application.
9. It was further part of the scheme that in or around September 2020,
based on the fraudulent application, SBA approved the 1500 Blancke Street LLC
EIDL loan in the amount of $150,000.
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10. It was further part of the scheme that in or around September 2020,
the SBA disbursed approximately $149,900 into a Bank-3 account in the name of
1500 West Blancke Street LLC, which was controlled by defendant DEUTSCH.
537 Knickerbocker Enterprises LLC EIDL Loan
11. It was further part of the scheme that on or about September 3, 2020,
defendant DEUTSCH applied for an EIDL loan on behalf of 537 Knickerbocker
Enterprises LLC, The 537 Knickerbocker Enterprises LLC EIDL application falsely
stated that 5387 Knickerbocker Enterprises LLC had gross revenues of $460,500 for
_ the 12 months prior to the disaster, and cost of goods sold of $118,000 for the 12
months prior to the disaster. The actual income for 587 Knickerbocker LLC was |
significantly lower than stated on the EIDL application.
12, It was further part of the scheme that in or around November 2020,
based on the fraudulent application, SBA approved the 537 Knickerbocker
Enterprises LLC EIDL loan in the amount of $150,000.
13. It was further part of the scheme that in or around November 2020,
the SBA disbursed approximately $149,900 into a Bank-3 account in the name of
537 Knickerbocker Enterprises LLC, which was controlled by defendant DEUTSCH.
Execution of the Scheme
14, Onor about the dates set forth below, in the District of New Jersey
and elsewhere, the defendant,
MENDEL DEUTSCH,
for the purpose of executing the scheme described above, transmitted and caused to
52
be transmitted by means of wire communications in interstate commerce the
writings, signs, and signals described below for each count, each transmission
constituting a separate count:
Count. ‘Approximate:
te |
Da
27 9/4/2020 An electronic transfer of approximately $149,900 from
the SBA to a Bank-3 account in the name of 1500 West
Blancke Street LLC that traveled through the States of
New Jersey and New York.
28 11/23/2020 An electronic transfer of approximately $149,900 from
the SBA to a Bank-3 account in the name of 537
Knickerbocker Enterprises LLC that traveled through
the States of New Jersey and New York.
In violation of Title 18, United States Code, Sections 1343 and 2.
53
COUNTS 29-30
(Money Laundering by Transacting in Criminal Proceeds)
(IDL loans - Deutsch)
1. Paragraph 2 of Count 6 of the Indictment and paragraphs 1 through 14
of Counts 27-28 of the Indictment are incorporated as if set forth in full herein.
2, On or about the dates set forth in the table below, in the District of
New Jersey and elsewhere, defendant,
MENDEL DEUTSCH,
did knowingly engage and attempt to engage in monetary transactions by, through,
and to a financial institution, affecting interstate and foreign commerce, in
criminally derived property of a value greater than $10,000, as set forth in the table
below, such property having been derived from a specified unlawful activity, that is,
wire fraud in violation of Title 18, United States Code, Section 1848, each monetary
transaction constituting a separate count:
_ Description of Monetary Transaction
9/4/2020 An electronic transfer of approximately $149,900,
representing the proceeds from the 1500 West Blancke
Street LLC EIDL loan from the Bank-8 account in the
name of 1500 West Blancke Street LLC to a Bank-3
account in the name of Deutsche Equity LLC.
30 11/23/2020 An electronic transfer of approximately $149,900,
representing the proceeds from the 587 Knickerbocker
Enterprises LLC EIDL loan from the Bank-3 account in
the name of 537 Knickerbocker Enterprises LLC to a
Bank-3 account in the name of Deutsche Equity LLC.
In violation of Title 18, United States Code, Sections 1957(a) and 2.
54
FORFEITURE ALLEGATION AS TO COUNTS
1-4, 8, 11, 20-21, and 27-28
1. The allegations contained in Counts 1-4, 8, 11, 20-21, and 27-28 of this
Indictment are hereby realleged and incorporated by reference for the purpose of
alleging forfeiture pursuant to Title 18, United States Code, Section 981(a)(1)(C)
and Title 28, United States Code, Section 2461(c).
2. As a result of committing the offenses charged in Counts 1-4, 8, 11, 20-
21, and 27-28 of this Indictment, the defendants charged in each such count shall
forfeit to the United States, pursuant to Title 18, United States Code, Section
981(a)(1)(C) and Title 28, United States Code, Section 2461(c), any property, real or
personal, said defendant obtained that constitutes or is derived from proceeds
traceable to the each of the offenses alleged in Counts 1-4, 8, 11, 20-21, and 27-28 of
this Indictment,
FORFEITURE ALLEGATION AS TO COUNT 6
1, The allegations contained in Count 6 of this Indictment are hereby
realleged and incorporated by reference for the purpose of alleging forfeiture
pursuant to Title 18, United States Code, Sections 981(a)(1)(C) and 982(a)(2){A),
and Title 28, United States Code, Section 2461(c).
2. As a result of committing the conspiracy offense charged in Count 6 of
this Indictment, the defendants charged shall forfeit to the United States, pursuant
to Title 18, United States Code, Sections 981(a)(1)(C) and 982(a)(2)(A), and Title 28,
United States Code, Section 2461(c), any property, real or personal, said defendant
55
obtained that constitutes or is derived from proceeds traceable to the offense
charged in Count 6 of this Indictment.
FORFEITURE ALLEGATION AS TO COUNTS 7 and 10
1. The allegations contained in Counts 7 and 10 of this Indictment are
hereby realleged and incorporated by reference for the purpose of alleging forfeiture
pursuant to Title 18, United States Code, Section 982(a)(2)(A).
2. As a result of committing one or both of the offenses charged in Counts
7 and 10 of this Indictment, the defendants charged in each such count shall forfeit
to the United States, pursuant to Title 18, United States Code, Section 982(a)(2)(A),
any property, real or personal, constituting, or derived from, said defendant
obtained directly or indirectly as a result of the each such offense.
FORFEJTURE ALLEGATION AS TO COUNTS 12-19, 22-26, and 29-30
1. The allegations contained in Counts 12-19, 22-26, and 29-30 of this
Indictment are hereby realleged and incorporated by reference for the purpose of
alleging forfeiture pursuant to Title 18, United States Code, Section 982(a)(1).
2. As a result of committing one or more of the money laundering
offenses charged in Counts 12-19, 22-26, and 29-30 of this Indictment, the
defendants charged in each such count shall forfeit to the United States, pursuant
to Title 18, United States Code, Section 982(a)(1), all property, real or personal,
involved in each such offense, and all property traceable to such property.
SUBSTITUTE ASSET PROVISION
1. If any of the property described above, as a result of any act or
omission of the respective defendant:
56
a. cannot be located upon the exercise of due diligence;
b. has been transferred to or sold to, or deposited with, a third party;
c. has been placed beyond the jurisdiction of the court;
d. has been substantially diminished in value; or
e. has been commingled with other property which cannot be divided
without difficulty;
it is the intent of the United States, pursuant to Title 21 United States Code,
Section 853(p), as incorporated by Title 18 United States Code, Section 982(a)(1)
and Title 28 United States Code, Section 2461(c), to seek forfeiture of any other
property of such defendants up to the value of the forfeitable property described
above.
A TRUE BILL
C-FOREPERSON
PHILIP R. SELLINGER
United States Attorney
57
CASE NUMBER:
United States District Court
District of New Jersey
UNITED STATES OF AMERICA
v.
ARTHUR SPITZER
MENDEL DEUTSCH
JOSHUA FELDBERGER
INDICTMENT FOR
18 U.S.C. § 1349
18 U.S.C. § 1344
18 U.S.C. § 1843
18 U.S.C. § 1028A(a)(1)
18 U.S.C. § 1014
18 U.S.C. § 1957(a)
18 U.S.C. § 2
INVors Rit ,
ne
“~~ “~ FOREPERSON
eee tne
PHILIP R. SELLINGER
UNITED STATES ATTORNEY
FOR THE DISTRICT OF NEW JERSEY
DANIEL A. FRIEDMAN
ASSISTANT U.S, ATTORNEY
CAMDEN, NEW JERSEY
(856) 757-5026
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