AUDASE

15 Are Charged With Defrauding Banks and Other Lenders of $20 Million

By JOSEPH BERGER NY TIMES

WHITE PLAINS — Many of the defendants were on Medicaid and were receiving food stamps. One couple even claimed they were homeless.

Yet, according to the United States attorney’s office in Manhattan and the Federal Bureau of Investigation, they secured 25 mortgage loans totaling $20 million for residential properties in Brooklyn, Harlem and Monroe, N.Y., by vastly overstating their income, net worth and the amounts in their bank accounts. A majority of the loans, the authorities said, went into default and were never repaid.

Preet Bharara, the United States attorney in Manhattan, on Thursday charged 15 men and women, 12 of them members of an extended family, with defrauding banks and other lending institutions out of the $20 million over a period of 10 years by lying about their assets and debts. Among banks said to have been defrauded were Bank of America and Credit Suisse First Boston.

"They played the part of prince or pauper, depending on what scam was being perpetrated," Mr. Bharara said at a news conference at the federal courthouse here. "People claimed to be millionaires when it suited them and claimed to be homeless when it suited them better."

A central figure in the scheme, the indictment said, was Irving Rubin, 58, of Brooklyn, who, it said, considered himself a real estate developer. Also indicted were his wife, Desiree, 57; his sons Yehuda, 29, of Monroe, and Joel, 33, of Brooklyn; and his brothers Abraham, 51, Jacob, 41, and Samuel, 59, all of Brooklyn.

Yehuda Rubin and his wife, Rachel Rubin, 29, the indictment said, received $43,863 in Medicaid and food stamps over six years by declaring in various documents that their only income was as little as $180 per month from Ms. Rubin’s job. But to get loans totaling $1 million, Mr. Rubin listed his income from work and rents as $17,000 per month, and Ms. Rubin claimed she was earning $14,000 per month.

Joel Rubin and his wife, Rivky, the indictment said, received $173,000 in Medicaid and food stamps over five years by telling government agencies they were homeless or earned income variously put at $130 or $180 per week. Yet they, too, received loans totaling $1 million by claiming Ms. Rubin’s job earned her $12,000 per month, the indictment said.

Kenneth Gribetz, a former district attorney of Rockland County who is representing one of the defendants, said that banks deserve much of the blame for the easy-to-get loans.

"I think that there was a period of time in the middle 2000s that banks were giving away loans at closing like it was water — without background checks," he said.

Mr. Bharara suggested much the same, saying that what contributed to the nation’s financial crisis "was the ability of people to get loans who should not get loans."

The investigation began three years ago in Orange County, where Monroe is, with a routine investigation of "a bad check," the Orange County sheriff, Carl E. DuBois, said. An investigation of bank accounts "uncovered facts that did not add up," and the case was turned over to the F.B.I.

Sheriff DuBois took pains to underscore the cost to his county of Medicaid and food stamp fraud, noting that Orange County spends half its budget on such programs, causing enormous "strain for local taxpayers" and "threatening all operations of county government."

The proceeds from the loans, the indictment said, were used "to personally enrich" the defendants and pay off credit card debts and personal home mortgages or were used for other real estate projects. Yehuda Rubin, the indictment said, took part in at least 10 of the deceptive loans, acting as a borrower or as a person granted a borrower’s power of attorney, a mortgage broker or the distributor of the loan proceeds.

Thirteen of the defendants were arrested in raids at their homes, and the two others surrendered later on Thursday. In Williamsburg and Borough Park in Brooklyn and in the village of Kiryas Joel in Monroe, news of the arrests spread quickly over WhatsApp and other digital circuits, with video clips of the raids included in many messages.

By Thursday afternoon, eight defendants had been arraigned before United States Magistrate Judge Paul E. Davison as family members and friends packed the courtroom or huddled in tense conversations in the hallway. The eight pleaded not guilty, and bails were set at amounts ranging from $100,000 to $1 million.

One of the $1 million bails was for Abraham Rubin, who the judge noted had served a four-month sentence for trying to bribe a "victim witness" with $500,000 in an unrelated investigation — the case against Nechemya Weberman, an unlicensed therapist in Brooklyn’s Satmar Hasidic community. Mr. Weberman was found guilty of sexually abusing a young client starting when she was 12.

Most of the defendants were charged with conspiracy to commit bank fraud and wire fraud, which carries a potential sentence of 30 years in prison, and conspiracy to make false statements to lenders, which carries a maximum term of five years. Seven defendants were charged with theft of public money — Medicaid and food stamps — a charge that carries a maximum sentence of 10 years.

One of those indicted was a real estate lawyer, Martin Kofman, 53, of Brooklyn, who the indictment said "distributed fraudulent loan proceeds between and among members of the conspiracy" and provided false information to lenders. Another was an appraiser, Pinchus Glauber, 35, of Chestnut Ridge, N.Y., who the indictment said inflated the value of properties held by the defendants. Mr. Gribetz, his lawyer, said, "We feel he is innocent of the charges and will be vindicated."