(CN) - The Federal Deposit Insurance Corp. has set its sights on four co-conspirators alleged to have played a relatively small role in the $92 million mortgage fraud that took out Washington Mutual Bank, filing a federal complaint that seeks to recover $1.2 million.
"The concerted action of all the participants in the scheme, including defendants, caused substantial losses to WaMu, which purchased the mortgages in justified reliance on the false representations and documentation created by defendants and other participants in the scheme," the FDIC claims in Brooklyn, N.Y.
It says the schemers helped fraudulent mortgage sellers create bogus loans that were sold to WaMu and others for millions of dollars, without conveying, recording or insuring the property titles.
Named as defendants are United General Title Insurance, Clear View Abstract, its owner Ted Doumazios and New York attorney Thomas Cusack III.
The FDIC, which took over Washington Mutual after its collapse in September 2008, says the defendants conspired with other entities that made mortgage payments to WaMu to create the illusion of legitimate mortgage loans and conceal the fraud.
Doumazios' $1.2 million scam represents a fraction of the massive $92 million fraud engineered by Long Island real estate developer Thomas Kontogiannis.
Both men pleaded guilty last year following their 2009 indictment along with seven others. Kontogiannis, who is not named as a defendant in the FDIC's present action, controlled several entities that staged sales of properties in Brooklyn and Queens by recruiting straw buyers from among family members and employees.
"As part of the scheme, members of the Kontogiannis family acted with others, including the defendants named herein, using the artifice of separate and independent entities, to create fraudulent mortgage loans with seemingly appropriate documentation, to sell those fraudulent 'mortgages' to WaMu and others for millions of dollars, to retain the proceeds of the sale that supposedly were to be distributed to fictitious mortgagors and purchasers, and to fraudulently convey funds and properties in an effort to avoid detection and the claims of WaMu, and the FDIC as receiver, for the losses resulting from the scheme," the complaint states.
"As a result of the scheme, WaMu purchased sham mortgage loans and suffered many millions of dollars in losses. WaMu purchased these loans in justifiable reliance on false representations and fraudulent documentation misrepresenting that each mortgage was given by a real mortgagor and borrower who were purchasing the properties at issue, that funds in the amount of the mortgage were dispersed to such borrowers, and that the loans were secured by a validly recorded first lien position on the properties.