Three Individuals Indicted in Mortgage, COVID-19 Relief Program Fraud Schemes

Summary

A press release of the U.S. Attorney's Office for the District of New Jersey dated Tuesday, September 3, 2024, announcing that three New Jersey residents were indicted over mortgage fraud and that two of them were also indicted over approximately $3 million in federal Economic Injury Disaster Loans. It states that Arthur Spitzer, 37, of Toms River, is charged with counts including eight counts of wire fraud, two counts of aggravated identity theft and 12 counts of money laundering. It states that Mendel Deutsch, 38, of Toms River, faces counts including three counts of wire fraud and two counts of money laundering, and Joshua Feldberger, 42, of Howell, faces one count each of wire fraud, bank fraud, bank and wire fraud conspiracy, aggravated identity theft and making a false statement to a financial institution. It was announced by U.S. Attorney Philip R. Sellinger.

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Press Release

Three Individuals Indicted in Mortgage, COVID-19 Relief Program Fraud Schemes

Tuesday, September 3, 2024

For Immediate Release

U.S. Attorney's Office, District of New Jersey

CAMDEN, N.J. – Three New Jersey residents were indicted for their role in a multimillion-dollar mortgage fraud scheme and two of the three were indicted for fraudulently obtaining approximately $3 million of federal Economic Injury Disaster Loans, U.S. Attorney Philip R. Sellinger announced today.

Arthur Spitzer, 37, of Toms River, New Jersey, is charged with eight counts of wire fraud, one count of bank fraud, one count of bank and wire fraud conspiracy, two counts of aggravated identity theft, one count of making a false statement to a financial institution, and 12 counts of money laundering. Mendel Deutsch, 38, of Toms River, is charged with three counts of wire fraud, one count of bank fraud, one count of bank and wire fraud conspiracy, one count of aggravated identity theft, one count of making a false statement to a financial institution, and two counts of money laundering. Joshua Feldberger, 42, of Howell, New Jersey, is charged with one count of wire fraud, one count of bank fraud, one count of bank and wire fraud conspiracy, one count of aggravated identity theft, and one count of making a false statement to a financial institution. The defendants were arraigned today before U.S. District Judge Edward S. Kiel in Camden federal court.

According to the indictment:

In 2019 and 2020, Spitzer orchestrated a scheme to defraud property owners and mortgage lenders by obtaining mortgage loans for real estate properties that he did not own. Spitzer identified 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. On six occasions, Spitzer obtained mortgage loans by misrepresenting that he had the authority to obtain mortgage loans secured by properties he did not own. Spitzer used fraudulent documents purporting to transfer control to him, which contained forged signatures of the true property owners. The mortgage loan proceeds were disbursed to bank accounts controlled by Spitzer or were used to otherwise benefit Spitzer, such as to pay off his debts. Spitzer then caused the mortgage loans to default by not making the required payments, leaving the true property owners subject to foreclosure and eviction.

In June 2020, Spitzer conspired with Deutsch and Feldberger to make it appear as if Spitzer owned three properties in Brooklyn, and agreed to sell them to Deutsch, who obtained a $4 million mortgage loan in connection with the transaction. Feldberger facilitated the fraudulent transaction as the owner of the settlement company that handled the transaction. The defendants created and sent letters stating that Deutsch had deposited significant funds into escrow toward the transaction, when in reality he had not; they created fake documentation purportedly transferring control of the properties to Spitzer; they failed to disclose a short-term loan obtained shortly before the transaction’s closing; and they lied to the mortgage lender by stating that the settlement company had received more than $2 million from Deutsch at closing, which led the mortgage lender to fund the loan. The defendants then used the mortgage loan proceeds to fund Deutsch’s down payment, which he had supposedly already provided.

In 2020 and 2021, Spitzer and Deutsch each fraudulently obtained millions of dollars of government loans that were intended for small businesses distressed by the COVID-19 pandemic. The Coronavirus Aid, Relief, and Economic Security (CARES) Act is a federal law enacted in March 2020 and was designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic. The CARES Act authorized the U.S. Small Business Administration (SBA) to provide Economic Injury Disaster Loans (EIDLs) of up to $2 million to eligible small businesses that were experiencing substantial financial disruption due to the COVID-19 pandemic. To obtain an EIDL loan, a qualifying small business was required to apply and provide information on its operations, including the number of employees and revenues or expenses.

Spitzer and Deutsch obtained EIDL loans for businesses that had little or no operations by submitting loan applications that included false statements about the applicant companies’ number of employees, revenues, cost of goods sold, or lost rents.

The counts of bank fraud conspiracy, bank fraud, and making a false statement to a financial institution, are each punishable by a maximum of 30 years in prison and a $1,000,000 fine. The counts of wire fraud conspiracy and wire fraud are each punishable by a maximum of 20 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. The counts of money laundering are each punishable by a maximum of 10 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. The counts of aggravated identity theft carry a mandatory two-year prison sentence.

U.S. Attorney Sellinger credited special agents of the FBI, Atlantic City Resident Agency, under the direction of Special Agent in Charge James E. Dennehy in Newark; special agents of IRS – Criminal Investigation, under the direction of Special Agent in Charge Jenifer L. Piovesan in Newark; and special agents of the Federal Deposit Insurance Corporation – Office of Inspector General, under the direction of Patricia Tarasca, Special Agent-in-Charge, New York Regional Office, with the investigation leading to the charges.

The government is represented by Assistant U.S. Attorney Daniel A. Friedman of the U.S. Attorney’s Office’s Criminal Division in Camden.

The charges and allegations contained in the charging instrument are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

spitzeretal.indictment.pdf

Updated September 3, 2024

Topic

Coronavirus

Component

USAO - New Jersey

Press Release Number: 24-330

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