Staten Island Ponzi Scheme Involves Reverse Mortgage Victims

A widely covered Ponzi scheme arrest in Staten Island, N.Y. involved reverse mortgages as one of its several alleged illegal operations.

The alleged scheme, estimated to be valued at $12 million, lasted from 2007 to 2010 and its operator has been charged with securities fraud, wire fraud and money laundering in a federal indictment.

The company behind the alleged Ponzi scheme was a real estate and financial consulting company, which allegedly encouraged some investors to obtain mortgages and invest the proceeds into two separate companies. According to the Federal Bureau of Investigation, some senior investors were encouraged to do the same with reverse mortgages, never seeing a return on the investments.

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“Perhaps the most egregious aspect of this case is that the defendant allegedly encouraged victims, some senior citizens, to obtain mortgages on their homes and to invest the proceeds in what the indictment charges was nothing more than a Ponzi scheme,” stated United States Attorney Loretta Lynch. “We will aggressively investigate and prosecute those who perpetrate these crimes.”

If convicted, for each count count of fraud and money laundering, Mazella faces a maximum 20 years’ imprisonment, according to the FBI.

View the FBI’s report on the alleged Ponzi scheme.

Written by Elizabeth Ecker

 

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  • What were some of the other sources of funds for this scheme? Did any of the victims borrow from friends or family who might be seniors?

    Did any of these reverse mortgage borrowers not talk to a counselor about what they taking the loan out for? It would seem that making the investment through originating a reverse mortgage would be the best way to protect the investors.

    Is an independent third party asking those who take proceeds through a life settlement transactions what they will use the funds for? Or how about the proceeds from the sale of stock, bonds, etc. especially if the account is self-directed?

    Unless the loan originator was involved in the scam, it is unreasonable and somewhat deceptive to tie the use of proceeds from a reverse mortgage to the scam. While it may somehow “sell more print,” it is a disservice to the senior community.

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