Brooklyn Business Owner Convicted of Multi-Million Dollar Real Estate Fraud Scheme

Press Release

Real Estate Company Owner Conspired to Purchase Brooklyn Real Estate at Fraudulently Depressed Short Sale Prices, Costing Mortgage Loan Holders Millions of Dollars

A federal jury in <_w3a_listitem listvalue="Choose an item."><_w3a_listitem listvalue="Brooklyn" datavalue="Brooklyn"><_w3a_listitem listvalue="Central Islip" datavalue="Central Islip"> Brooklyn returned a guilty verdict <_w3a_listitem listvalue="Choose an item."><_w3a_listitem listvalue="today" datavalue="today"><_w3a_listitem listvalue="yesterday" datavalue="yesterday"> yesterday against Avraham Tarshish for conspiracy to commit wire fraud and bank fraud, and related wire fraud counts, in connection with a scheme to defraud mortgage loan holders, including the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) and other mortgage lending businesses. The verdict followed a 12-day trial before Chief United States District Judge Margo K. Brodie. When sentenced, the defendant faces up to 30 years in prison.

Breon Peace, United States Attorney for the Eastern District of New York, Robert Manchak, Special Agent in Charge, Federal Housing Finance Agency, Office of Inspector General, Northeast Region (FHFA-OIG), Vicky Vazquez, Special Agent in Charge, U.S. Department of Housing and Urban Development, Office of Inspector General, Northeast Region (HUD-OIG) and Thomas M. Fattorusso, Special Agent in Charge, Internal Revenue Service-Criminal Investigation, New York (IRS-CI) announced the <_w3a_listitem listvalue="charges" datavalue="charges"><_w3a_listitem listvalue="deferred prosecution agreement" datavalue="deferred prosecution agreement"><_w3a_listitem listvalue="extradition" datavalue="extradition"><_w3a_listitem listvalue="extraditions" datavalue="extraditions"><_w3a_listitem listvalue="guilty plea" datavalue="guilty plea"><_w3a_listitem listvalue="guilty pleas" datavalue="guilty pleas"><_w3a_listitem listvalue="investigation" datavalue="investigation"><_w3a_listitem listvalue="sentence" datavalue="sentence"><_w3a_listitem listvalue="sentences" datavalue="sentences"><_w3a_listitem listvalue="settlement" datavalue="settlement"><_w3a_listitem listvalue="verdict" datavalue="verdict"><_w3a_listitem listvalue="verdicts" datavalue="verdicts">verdict.

"The defendant defrauded taxpayer-funded mortgage loan holders out of millions of dollars and took advantage of programs designed to help distressed property owners in need," stated United States Attorney Peace. "Short sale mortgage fraud not only harms lending intuitions, it also depresses real estate values throughout our neighborhoods and prevents community members from gaining fair access to housing. Today's guilty verdict should serve as a reminder that my Office, together with our law enforcement partners, will continue to vigorously prosecute those who corruptly line their pockets at the expense of mortgage lenders and borrowers."

Mr. Peace expressed his appreciation to the United States Department of Homeland Security, Homeland Security Investigations, New York Field Office (HSI), and the HSI El Dorado Financial Crimes Task Force for their work on the case.

"The defendant and his co-conspirators corrupted a process meant to assist homeowners facing foreclosure. By undermining the integrity of this process, Fannie Mae, Freddie Mac, and other lenders were deprived of millions of dollars," said Robert Manchak, Special Agent-in-Charge of FHFA-OIG's Northeast Region. "Today's verdict demonstrates the resolve of the Federal Housing Finance Agency Office of Inspector General and its law enforcement partners to pursue those who defraud the government-sponsored enterprises."

"Tarshish and other co-conspirators engaged in a $2.4 million scheme to cause FHA-insured mortgage lenders to approve short sale transactions at fraudulently depressed prices by misrepresenting material information for his own enrichment," said Special Agent-in-Charge Vicky Vazquez with the U.S. Department of Housing and Urban Development (HUD), Office of Inspector General (OIG). "No one is above the law. HUD OIG will continue to work with the U.S. Attorney's Office and our law enforcement partners to investigate individuals who jeopardize the integrity of FHA mortgage programs."

"In this elaborate scheme to prey on people facing foreclosure and manipulating the mortgage loan system, Tarshish's fraud resulted in a multi-million dollar loss to his victims. With this conviction, Tarshish now faces time behind bars where he can longer line his pockets at the expense of his community and their lenders," said Thomas M. Fattorusso, Special Agent in Charge of IRS-CI New York.

The defendant was an employee of My Ideal Property Inc. and an owner of Exclusive Homes Realty Group, Inc., Exclusive Homes NY, LLC and Homeowners Solutions Group LTD, Queens- and Brooklyn-based companies formed to buy and sell real property. As proven at trial, between March 2013 and November 2018, the defendant and others conspired to defraud mortgage lenders, misleading them into approving short sale transactions at fraudulently depressed prices. In a short sale, with the approval of the mortgage lender or servicer, a mortgage loan borrower sells his or her property for less than the outstanding balance of the mortgage loan. The proceeds from the short sale, less approved closing costs, are applied to the outstanding mortgage loan balance owed to the lender, who typically agrees to forgive the borrower's remaining mortgage loan balance. Here, the defendant fraudulently manipulated the short sale process and immediately flipped properties for prices well above the short sale prices.

Among other things, the defendant and his co-conspirators paid homeowners in foreclosure to lock them in to conducting short sales with them; took steps to preclude other prospective purchasers from making higher offers for properties by failing to market properties as required by the lenders; placed fraudulent liens on properties; and further depressed the properties' values by removing toilets and plumbing, and causing other forms of property damage-a process that the defendant and his co-conspirators referred to as making the homes "pretty." In furtherance of the scheme, the defendant and his co-conspirators also provided the mortgage lenders and servicers with false and misleading information in transaction documents and failed to disclose either payments made to the borrower and others related to short sale or contemporaneous agreements to transfer the properties at inflated prices. Many of the affected mortgage loans were insured by the Federal Housing Administration, or owned or guaranteed by Fannie Mae or Freddie Mac.

At trial, the government introduced evidence that the defendant participated in a conspiracy spanning years that involved dozens of fraudulent short sale transactions. From among those dozens of transactions, the government introduced specific evidence relating to eleven examples of Brooklyn short sales through which the defendant and his co-conspirators defrauded lenders and servicers of more than $2.4 million.

When sentenced, Aronov, Konstantinovskiy and Dafna face up to a 30-year max sentence. Herskowitz faces up to a 5-year sentence.

Anyone with information concerning similar mortgage-related fraud can report it by contacting the Federal Housing Finance Agency Office of Inspector General Hotline at 800-793-7724 or via the web at: https://www.fhfaoig.gov/ReportFraud#hotlineform.

In July 2022, Mr. Peace was selected as the Chairperson of the White Collar Fraud subcommittee for the Attorney General's Advisory Committee (AGAC). As the leader of the subcommittee, Mr. Peace plays a key role in making recommendations to the AGAC to facilitate the prevention, investigation and prosecution of various financially motivated, non-violent crimes including bank fraud and wire fraud.

The government's case is being handled by the Office's Business and Securities Fraud Section. Assistant United States <_w3a_listitem listvalue="Choose an item."><_w3a_listitem listvalue="Attorney" datavalue="Attorney"><_w3a_listitem listvalue="Attorneys" datavalue="Attorneys"> Attorneys Shannon C. Jones, John Vagelatos, Joshua B. Dugan and Russell Noble are in charge of the prosecution, with the assistance of Paralegal Specialist Liam McNett. Assistant United States Attorney Tanisha Payne of the Office's Asset Recovery Section is handling forfeiture matters.

The <_w3a_listitem listvalue="Choose an item."><_w3a_listitem listvalue="Defendant" datavalue="Defendant"><_w3a_listitem listvalue="Defendants" datavalue="Defendants">Defendant:

AVRAHAM TARSHISH (also known as "Avi Tarshish")
Age: 45
Queens Village, New York

Co-Defendants Who Previously Pleaded Guilty:

ISKYO ARONOV (also known as "Isaac Aronov")
Age: 37
Miami, Florida

MICHAEL KONSTANTINOVSKIY (also known as "Michael Kay")
Age: 38
Rego Park, Queens

TOMER DAFNA
Age: 53
Great Neck, New York

MICHAEL HERSKOWITZ
Age: 45
Brooklyn, New York

E.D.N.Y. Docket No. 19-CR-408 (MKB)

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Updated November 22, 2024