Two Accused of Bilking Taxpayers in Loan Scheme

     MANHATTAN (CN) – The operator and sales manager of Buy-a-Home Entities defrauded taxpayers of more than $1 million by deceiving the government into insuring $7.5 million in mortgages to “unsophisticated, unqualified” borrowers, federal prosecutors say.
     Buy-a-Home operator Mitchell Cohen and sales manager Erin Davis “recruited unsophisticated and financially unqualified borrowers to buy homes in which Cohen had a financial interest,” according to the four-count indictment.
     They then lied about the borrowers’ qualifications to secure mortgage insurance through the U.S. Department of Housing and Urban Development’s Federal Housing Administration (FHA), which made the loans more enticing to banks.
     Prosecutors say Cohen and Davis helped borrowers qualify for the government-backed loans by paying down their debt, covering their closing costs and making their initial mortgage payments to make them appear more creditworthy and then and then lying to the government about where the money came from.
     “Because the issuance of FHA insurance was based upon false statements made to HUD, and most of the borrowers could not truly afford the mortgage loans they were provided, many of those loans subsequently went into foreclosure proceedings and, as a result, HUD has paid nearly $1 million in insurance payments related to these loans,” prosecutors say.
     They claim Cohen also committed perjury by denying involvement with a company called Y-Rent New York after a federal judge barred him from dealing with federally insured mortgages in the government’s civil case against him. Y-Rent was simply Buy-a-Home under a new name, prosecutors claim.
     Cohen and Davis are charged with conspiracy to commit wire, bank and mail fraud; conspiracy to make false statements to the government and a federally insured bank; and perjury.

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