Two men from the state of New Jersey have been arraigned in the U.S. District Court of New Jersey for their alleged respective roles in defrauding several senior homeowners in a scheme related to the use of a reverse mortgage, according to an announcement made Monday by U.S. Attorney Craig Carpenito and a subsequent press release.
Under the alleged scheme, the two men prompted false and inflated appraisals used to close reverse mortgages—the proceeds of which they then used for their own purposes.
The men, 46-year old Rafael Peralta and 40-year old Philip Puccio Jr., were initially indicted on February 8 by a federal grand jury on seven total counts: one count of conspiracy to commit bank fraud and six counts of bank fraud. Their arraignment took place on Friday, March 15 in Trenton federal court.
“From November 2007 through December 2010, Peralta and Puccio, home repair contractors, allegedly conspired to fraudulently obtain Home Equity Conversion Mortgage (HECM) – also known as reverse mortgage – proceeds by submitting inflated and fraudulent documentation to various victim banks to influence their decision to approve and fund HECMs,” a press release from the U.S. Attorney’s office said.
Peralta and Puccio then allegedly went on to recruit a conspirator to prepare false real estate appraisals that inflated the apparent value of the properties that the HECMs would be taken against, which ultimately influenced each lender’s decision to provide larger loans than would be achieved through an accurate property appraisal, according to court documents.
Under the scheme, the men then allegedly facilitated the submission of fraudulent loan documents that concealed disbursements of loan proceeds that went to them and organizations they owned. “The diverted loan proceeds were deposited into bank accounts controlled by Peralta and Puccio and used for their personal benefit and to further the conspiracy,” the press release said.
The charge of conspiracy to commit bank fraud and the charges of bank fraud, respectively, have a maximum penalty of 30 years in prison, and either a fine of $1 million, twice the gross financial gain by the defendants or twice the gross financial loss to others, whichever sum is greater.
In his announcement of the arraignment, U.S. Attorney Carpenito credited special agents of the Federal Housing Finance Agency, Office of the Inspector General, special agents of the FBI, and special agents of the Department of Housing and Urban Development among others for their roles in the investigation leading to the charges.