A real estate investor who is building Newark's new Department of Public Works garage was arrested along with three others on federal charges of using “straw buyers” to fraudulently obtain mortgage loans from a bank.
Victor Santos, 57, of Wachtung, was charged by federal law enforcement authorities with conspiracy to commit bank fraud. Also charged in the scheme were Arsenio Santos, 50, of Warren; Fausto Simoes, 64, of Millington; and, Raquel Casalinho, 37, of Union.
The U.S. Attorney's Office alleges that from September 2007 through November 2008, Victor Santos, a real estate investor; Arsenio Santos, a builder and Victor’s cousin; Casalinho, a junior home mortgage consultant and Victor’s niece; and Simoes, a real estate settlement attorney, and others allegedly conspired to fraudulently obtain mortgage loans with a total value of more than $5 million.
The defendants allegedly recruited straw buyers–individuals who purchased properties for others in order to conceal the identity of the actual purchaser in exchange for a fee–to purchase properties in Newark and obtained their identifying information, including Social Security cards and driver's licenses.
In exchange for the use of the straw buyers’ identity and credit history, Victor Santos, Arsenio Santos, and others allegedly agreed to pay each of the straw buyers a fee of approximately $5,000, provide the straw buyer’s down payment and cash required for closing, secure tenants to lease the purchased property and make the mortgage payments on each of the fraudulently obtained mortgages. These secret agreements were not disclosed to the bank.
The schemes highlighted in the complaint cite the defendants as preparing and submitting mortgage applications containing false information to the bank and obtained loans totaling more than $900,000.
The defendants allegedly arranged transactions for the Newark properties, which the straw buyers would nominally purchase for far more than the sellers had agreed to sell them, with the defendants keeping the difference between the contract price and the amounts the sellers received.
Simoes was the closing attorney on approximately ten of the fraudulent transactions and signed and certified the final settlement statements, which falsely stated the cash required for closing each transaction came from the straw buyer. In fact, Victor Santos and his alleged conspirators provided those funds to Simoes and the funds were deposited into Simoes’ attorney trust account.
For certain transactions, a shell company–whose bank account was controlled by Victor Santos and others and to which funds from fraudulently obtained mortgage loans were disbursed–was the source of the cashier’s checks given to Simoes to fund the buyer’s cash required at closing.
The conspiracy to commit bank fraud carries a maximum potential penalty of 30 years in prison, a fine of $1 million or twice the gross gain to the defendants or twice the gross loss to others, whichever is greater.