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Former loan officer gets 27 months in federal prison for property-flipping scheme

Photo Credit: Cliffview Pilot

YOU READ IT HERE FIRST : A Bergen County loan officer who participated in a property-flipping scheme in Paterson is going to federal prison for 27 months and was ordered to pay $1.03 million in restitution as part of a guilty plea to wire fraud and money laundering.

Gerald Carti, 64, of Oakland, a former shareholder of Pine Brook-based U.S. Mortgage Corp., admitted conspiring in the scheme, one of a dozen participants who’ve admitted their involvement.

The network included Michael Eliasof, a former Paramus real estate agent; William Colacino, (now deceased) a former Garfield attorney and municipal court judge; Melanie Gebbia, Colacino’s legal assistant; William  Ottaviano, an appraiser; Frank Corallo, a former U.S. Mortgage loan processor; Renford Davis and Hopeton Bradley (now deceased), who jointly managed many of the Paterson properties involved in the scheme, federal prosecutors said.

Besides Carti, Eliasof, Gebbia, Ottaviano, Corallo, Davis, Bradley and two other conspirators — Claribel Morrobel and Norman Barna — have each pleaded guilty in connection with the scheme.


UPDATE ( Jan 31, 2011 ): Michael Eliasof, 66, formerly of Mahwah, N.J., and now of Boca Raton, Fla.,was sentenced in U.S. District Court in Newark to 40 months in federal prison in connection with the scheme after pleading guilty earlier to one count of money-laundering conspiracy.

Co-defendants Frederick Ugwu and Amer Mir, a former loan officer of United Home Mortgage Co., were convicted after a five-week jury trial in December 2009. All have yet to be sentenced.

Carti helped Eliasof obtain mortgage loans for various borrowers to purchase two- and three-family homes in Paterson, knowing that the borrowers would be putting no money down to purchase the properties, according to court testimony.

Carti allowed the borrowers to submit loan applications to U.S. Mortgage, falsely stating that they had made substantial down payments, and had U.S. Mortgage fund the loans, even though the borrowers hadn’t made any down payments.

Closings were staged at Colacino’s law office. Carti got 50 percent of the fees that U.S. Mortgage received for each loan as commissions. When the loans began defaulting, Carti helped arrange their repayment through new fraudulent loans, many of which were originated by Mir, witnesses testified.

Among the agencies involved in the widening probe are the U.S. Department of Housing andUrban Development Office of Inspector General (HUD-OIG), the FBI, the U.S. Postal Inspection Service and IRS Criminal Investigations, who have uncovered fraudulent Federal Housing Administration-insured and conventional mortgage loans originated by various New Jersey mortgage companies, including U.S. Mortgage and United Home Mortgage.

Assistant U.S. Attorney Mark E. Coyne, formerly of the U.S. Attorney’s Office Economic Crimes Unit and now Chief of the Appeals Division, has been handling the case.

In addition to the prison term, U.S. District Judge Jose L. Linares sentenced Carti to three years of supervised release and ordered him to pay $1,034,956.74 in restitution.

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