| Fraudulent Short Sales
Charged in EDNY Under False Claims Act But
Still Predatory Lending
By Matthew
Russell Lee, Patreon
BBC
- Guardian
UK - Honduras
- ESPN
EDNY COURTHOUSE,
Jan 4 – In Brooklyn,
allegations of predatory and
fraudulent lending.
On January 4 the
US filed a civil complaint
seeking damages and penalties
against three individuals and
multiple companies alleged to
have engaged in a wide-ranging
mortgage fraud scheme to
defraud the government. The
complaint, unsealed this
afternoon by United States
District Judge Margo K.
Brodie, alleges that Iskyo
Aronov, Ron Borovinsky,
Michael Konstantinovskiy, and
companies that they owned or
controlled, engaged in
fraudulent short sales of
residential properties insured
by the Federal Housing
Administration (FHA) of the
United States Department of
Housing and Urban Development
(HUD).
The suit
is brought pursuant to the
False Claims Act (FCA) and the
Financial Institutions Reform,
Recovery and Enforcement Act
(FIRREA).
Pursuant to HUD’s
Pre-Foreclosure Sale Program,
qualifying homeowners with
defaulted, FHA-insured
mortgages may sell their
properties in a “short sale”
for less than the balance of
the mortgage if the sale is
for the fair market value of
the property. If a homeowner
obtains approval for a short
sale, the lender releases the
mortgage after the short sale
and submits an FHA insurance
claim to HUD to cover the
outstanding mortgage balance
net of the short sale
proceeds, plus approved costs
and interest. HUD, in turn,
pays the lender’s claim from
federal funds. 2
Aronov was the founder, Chief
Executive Officer and
President of defendants My
Ideal Property Inc., My Ideal
Propery Group LLC and MIP
Management Inc., and also
controlled other affiliated
corporate entities that he
allegedly established to help
him fraudulently acquire
residential properties.
Borovinsky identified himself
as a co-founder with Aronov of
My Ideal Property.
Konstantinovskiy worked as an
agent for My Ideal Property
where he allegedly conspired
with others to fraudulently
obtain properties.
As alleged in the
complaint, from at least 2013
through 2016, the defendants
defrauded HUD by manipulating
the short sale process to
acquire residential properties
from numerous distressed
homeowners for below-fair
market value prices in
non-arm’s-length transactions.
The individual defendants used
various corporate entities in
furtherance of the fraudulent
scheme. In the process,
defendants made a host of
material misrepresentations in
critical transaction
documents. As a result,
defendants not only acquired
the properties for below-fair
market value prices, but
obtained broker fees in the
transactions and induced
lenders to release the FHA-
insured mortgages at a loss.
In turn, HUD paid the lenders’
claims for FHA insurance
from federal funds.
These payments by HUD were
artificially inflated as a
result of the defendants’
fraudulent conduct.
Another
Predatory Bender. Watch this
site.
***
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