New Jersey residents charged with multimillion-dollar mortgage fraud

CAMDEN – Two Ocean County residents and one Monmouth County resident were charged Tuesday for their alleged roles in a multimillion-dollar mortgage fraud scheme, U.S. Attorney Philip R. Sellinger said Tuesday.

Arthur Spitzer, 37, of Toms River, is charged with eight counts of wire fraud, one count of bank fraud, one count of wire and bank fraud conspiracy, two counts of aggravated identity theft, one count of making a false statement to a financial institution and 12 counts of money laundering, Sellinger said.

Mendel Deutsch, 38, of Toms River, is charged with three counts of wire fraud, one count of bank fraud, one count of wire and bank fraud conspiracy, one count of aggravated identity theft, one count of making a false statement to a financial institution and two counts of money laundering, he said.

Joshua Feldberger, 42, of Howell, is charged with one count of wire fraud, one count of bank fraud, one count of wire and bank fraud conspiracy, one count of aggravated identity theft and one count of making a false statement to a financial institution, according to Sellinger.

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The defendants were arraigned before U.S. District Judge Edward S. Kiel in federal court in Camden.

In 2019 and 2020, Spitzer orchestrated a scheme to defraud homeowners and mortgage lenders by obtaining mortgage loans for real estate properties he did not own, according to the indictment.

Specifically, Spitzer identified properties in New Jersey and Brooklyn that either had no mortgages or had mortgages for amounts significantly below the property’s market value, the indictment alleges.

On six occasions, Spitzer obtained mortgage loans by falsely claiming that he had the authority to obtain such loans secured by properties he did not own. Spitzer used fraudulent documents purporting to transfer control to him, which contained forged signatures of the true owners of the properties. The mortgage loan funds were disbursed to bank accounts controlled by Spitzer or used to benefit him in some other way, such as to pay his personal debts. Spitzer then caused the mortgage loans to default by failing to make required payments, leaving the true owners of the properties open to foreclosure and eviction, all according to the indictment.

In June 2020, the complaint alleges that Spitzer conspired with Deutsch and Feldberger to make it appear that Spitzer owned three properties in Brooklyn and agreed to sell them to Deutsch, who obtained a $4 million mortgage loan in connection with the transaction.

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Feldberger facilitated the fraudulent transaction as the owner of the settlement company that handled the transaction. The defendants created and sent letters claiming that Deutsch had put significant funds into escrow for the transaction, when in fact he had not. They created false documentation purportedly transferring control of the properties to Spitzer and failed to disclose a short-term loan obtained shortly before the transaction closed. They lied to the mortgage lender by claiming that the settlement company had received more than $2 million from Deutsch at closing, prompting the mortgage lender to fund the loan. The defendants then used the mortgage loan funds to fund Deutsch’s down payment, which he had allegedly already provided, all according to the indictment.

In 2020 and 2021, the complaint goes on to allege that Spitzer and Deutsch fraudulently obtained millions of dollars in government loans that were intended for small businesses negatively impacted by the COVID-19 pandemic.

The U.S. Coronavirus Aid, Relief, and Economic Security (CARES) Act was enacted in March 2020 to provide emergency financial assistance to millions of Americans affected by the economic effects of the pandemic.

The CARES Act authorized the U.S. Small Business Administration to provide Economic Injury Disaster Loans (EIDL) of up to $2 million to eligible small businesses experiencing significant financial disruption due to the COVID-19 pandemic. To obtain an EIDL loan, a qualifying small business was required to apply and provide information about its operations, including the number of employees and revenue or expenses.

Spitzer and Deutsch obtained the loans for businesses that had little or no operations by submitting loan applications that included false statements about the applicants’ number of employees, revenue, cost of goods sold or lost revenue, the indictment alleges.

The charges of conspiracy to commit bank fraud, bank fraud and making a false statement to a financial institution are punishable by a maximum of 30 years in prison and a $1 million fine.

The charges of conspiracy to commit wire fraud and wire fraud are punishable by a maximum of 20 years in prison and a fine of $250,000, or twice the gross gain or loss from the crime.

Money laundering charges carry a maximum of 10 years in prison and a fine of $250,000, or twice the gross gain or loss from the crime.

The aggravated identity theft charges carry a mandatory two-year prison sentence.

The investigation was conducted by the following federal agents:

Special Agents of the FBI, Atlantic City Resident Agency, under the direction of Special Agent in Charge James E. Dennehy in Newark;
IRS Special Agents – Criminal Investigation, under the direction of Special Agent in Charge Jenifer L. Piovesan in Newark;
Special Agents of the Federal Deposit Insurance Corporation – Office of Inspector General, under the direction of Patricia Tarasca, Special Agent in Charge, New York Regional Office, with the investigation leading to the charges.

The prosecution is being handled by Assistant U.S. Attorney Daniel A. Friedman of the U.S. Attorney’s Criminal Division in Camden.

Spitzer is represented by New York-based defense attorneys Henry Mazurek and Jason Ser. Deutsch is represented by defense attorneys Todd Blanche and Emil Bove, also in New York. Feldberger is represented by defense attorney Zach Intrater, also in New York.

Contact Asbury Park Press reporter Erik Larsen at [email protected].

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New Jersey residents charged with multimillion-dollar mortgage fraud

ByS. Jacob

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