Seven people, including a New York attorney who received a small measure of fame for nearly winning a major televised poker tournament, have been charged in an 82-count indictment stemming from an alleged mortgage fraud scheme.
Kings County prosecutors have charged Long Island attorney and part-time poker player Ralph Pecorale with grand larceny, conspiracy, and other chargers. Pecorale and his co-conspirators allegedly bought and sold the same house several times over a four year period, fraudulently obtaining four mortgages worth $2 million. In at least one case, the mortgage fraud ring allegedly stole a woman's identity in order to obtain a mortgage.
Pecorale pocketed $436,500 for finishing 2nd in the 2005 United States Poker Championship main event, a major high-stakes poker tournament televised on ESPN. Pecorale was featured prominently in ESPN's coverage of the event.
The defendants are charged with conspiring to fraudulently buy and sell 698A DeKalb Ave. in the Bedford-Stuyvesant neighborhood of Brooklyn, New York as many as five times between 2005 and 2009. They first purchased the building, which was apparently vacant since 1975, in 2005, using a straw buyer, whom they helped to get a loan, using falsified information, according to the indictment. That purchase was for $600,000, and the mortgage was for $544,000. The indictment also charges that in 2006 the ring arranged for the building to be sold to a different straw buyer, for $715,000. With two mortgages equaling the full sale price, the defendants were able to pay off the first the mortgage and profit $102,000, according to the indictment.
The ring eventually stopped making mortgage payments, and in 2007, foreclosure proceedings had begun. The indictment charges that on Feb. 14, 2008, the defendants convinced the banks holding the mortgages to accept $524,000 to settle the debt – approximately $200,000 less than they were owed. On the same day, according to the indictment, the ring sold the property to yet another straw buyer – this one using a stolen identity – who had obtained a $675,000 mortgage, allowing the defendants to reap a profit of $151,000 in a single day.
In 2009, the mortgage was in default, and the defendants were negotiating with the bank for another fraudulent sale, when the scheme was discovered by the Brooklyn District Attorney’s Office and stopped.
The scam came to light when a Brooklyn resident learned a mortgage company believed she had defaulted on a $675,000 mortgage. Having never applied for, nor accepted, the loan, she contacted the Brooklyn District Attorney’s Action Center, to report that her identity had been stolen. The case was investigated by the Mortgage Fraud Unit of the Rackets Division.
Pecorale, for his part in the scheme, allegedly represented the banks in all four transactions and made the scheme work by misleading them into making the loans. Others included in the scheme include mortgage brokers charged with putting together the fraudulent deals and individuals who recruited straw buyers and created phony documentation to support fraudulent mortgage applications and identity theft.
Pecorale and the others involved in the scheme face up to 15 years in prison if convicted on the charges.