2015 ABA Real Estate Litigation Forum "Hot Topics and Trends in Real Estate Litigation" Panel

Jonathan S. Sack

Morvillo Abramowitz Grand Iason & Anello P.C.

Government Investigations and Prosecutions of Misconduct that Led to or Arose From the Financial Crisis Press Release, U.S. Attorney's Office, Southern District of New York, Fourteen Defendants Charged in White Plains Federal Court with Massive Mortgage Fraud Conspiracy (Nov. 13, 2014) Press Release, U.S. Attorney's Office, Eastern District of New York, Long Island Mortgage Bank and Five Other Indicted in $30 Million Bank Fraud Conspiracy (May 6, 2014) Press Release, U.S. Attorney's Office, Southern District of New York, Leader of $66 Million Long Island Mortgage Fraud Scheme Sentenced in Manhattan Federal Court (May 22, 2013) Federal Bureau of Investigation, 2010 Mortgage Fraud Report Year in Review (Aug. 2011) SEC Enforcement Actions Addressing Misconduct That Led To or Arose From the Financial Crisis (updated through May 26, 2015) United States v. Countrywide Financial Corp., 12 Civ. 1422 (JSR) (Opinion dismissing False Claims Act counts and otherwise denying motion to dismiss) Press Release, New York Attorney General, A.G. Schneiderman Secures $7.8 Million Settlement With First American Corporation And Eappraiseit For Role In Housing Market Meltdown (Sept. 28, 2012) Anti-Money Laundering Efforts in the Real Estate Industry Jennifer Shasky Calvery, Director, Financial Crimes Enforcement Network, Address at West Coast AML Forum (May 6, 2015) Financial Crimes Enforcement Network, Real Estate Title and Escrow Companies: A BSA Filing Study, Assessing Suspicious Activity Reports and Suspicious Form 8300 Filings Related to Real Estate Title and Escrow Businesses 2003-2011 (July 2012) Construction Related Fraud Investigations and Prosecutions

Press Release, U.S. Attorney's Office, Eastern District of New York, Hunter Roberts Construction To Pay More Than $7 Million In Penalties And Restitution For Engaging In A Fraudulent Overbilling Scheme (May 20, 2015) Press Release, U.S. Attorney's Office, Southern District of New York, New York State Senate Majority Leader Dean Skelos and Son Arrested on Corruption Charges (May 4, 2015) Press Release, U.S. Attorney's Office, Southern District of New York, Manhattan U.S. Attorney Files And Settles Civil Fraud Lawsuit Against Subcontractor For Fraudulent Conduct That Violated Rules Designed To Encourage Participation Of Minority And Women-Owned Businesses (May 13, 2014) Press Release, U.S. Attorney's Office, Eastern District of New York, Construction Giant Lend Lease (Bovis) Charged with Defrauding Clients in Three Separate Schemes and Will Pay Over $50 Million and Institute Comprehensive Reforms (April 24, 2012) Other Helpful Materials Financial Crimes Enforcement Network, Suspected Money Laundering in the Real Estate Industry, An Assessment Based Upon Suspicious Activity Report Filing Analysis (April 2008), available at http://www.fincen.gov/news_room/rp/files/MLR_Real_Estate_Industry_SAR_web.pdf (last visited June 17, 2015) Louise Story and Stephanie Saul, Stream of Foreign Wealth Flows to Elite New York Real Estate, N.Y. Times, Feb. 7, 2015, available at http://www.nytimes.com/2015/02/08/nyregion/stream-of-foreign-wealth-flows-to-time-warner-condos.html (last visited June 17, 2015)

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FOR IMMEDIATE RELEASE Thursday, November 13, 2014

U.S. Attorneys Southern District of New York News Press Releases

Department of Justice

U.S. Attorneys Office

Southern District of New York

Fourteen Defendants Charged In White Plains Federal CourtWith Massive Mortgage Fraud Conspiracy

Preet Bharara, the United States Attorney for the Southern District of New York, and George Venizelos,the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation(FBI), and Carl E. DuBois, the Sheriff of Orange County, today announced the unsealing of anIndictment (the Indictment) charging 15 defendants, including 14 defendants with conspiracy to commitbank fraud and wire fraud in connection with mortgages and other loans secured by properties inBrooklyn, Manhattan and Monroe in Orange County, New York. The defendants include several relatedmembers of a family, the Rubins, as well as a real estate attorney and a real estate appraiser. TheIndictment sets forth a total of 21 counts charging various defendants with additional crimes, includingmaking false statements to lenders, aggravated identity theft, and theft of public money. Thirteen of thedefendants were arrested today in a coordinated takedown. They will be arraigned on the charges in theIndictment before United States Magistrate Judge Paul E. Davison in the White Plains federalcourthouse.

U.S. Attorney Preet Bharara stated: The charges unsealed today describe a sweeping and cynical fraud.As alleged, the scheme carried out by the Rubins and others ripped off banks, welfare programs, andtaxpayers. It ranged from 2004 to 2014, from Brooklyn to Harlem to Orange County, and the individualsinvolved alternately played the parts of prince or pauper, depending on which scam was beingperpetrated. Now their alleged double dealing will be stopped, and they will have to submit to the truth-seeking process of the criminal justice system.

FBI Assistant Director George Venizelos stated: In a clear case of double dipping, the defendantsconvinced lenders of their affluence while allegedly accepting aid from government programs established

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for the benefit of those less fortunate, profiting from the proceeds of millions of dollars in fraudulentlyobtained loans and significantly defrauding the government of public money. May todays charges remindthose who poke holes in the government safety net and exploit gaps in the mortgage and bankingsectors that they will face the error of their ways.

Orange County Sheriff Carl E. DuBois stated: We would like to thank United States Attorney PreetBharara and his staff for their efforts and assistance, and I would also like to thank the personnel from allof the agencies involved for a commitment to this long and complicated investigation. It is important tonote that this case originated from the Orange County Sheriffs Office. Upon investigating what is usuallya routine case, our investigator showed due diligence in her follow up, and with the latitude andencouragement by my office to investigate further using FBI resources, the result was a lengthy andcomprehensive multi-jurisdictional, multi-million dollar mortgage fraud investigation.

According to allegations made in the Indictment:

IRVING RUBIN, the defendant, was a purported real estate developer. IRVING RUBINs son, YEHUDARUBIN, the defendant, was a purported mortgage broker and real estate developer. IRVING RUBIN, aswell as his brothers ABRAHAM RUBIN, JACOB RUBIN, and SAMUEL RUBIN, the defendants; his sonsYEHUDA RUBIN and JOEL RUBIN, the defendants; his wife, DESIREE RUBIN, the defendant; and hisrelatives-in-law JOEL KOPPEL, BENZION KRAUS, RIFKA RUBIN, RACHEL RUBIN, and RIVKY RUBIN,the defendants, claimed to own properties in Brooklyn, New York, as well as in Manhattan and OrangeCounty, New York. MARTIN KOFMAN, the defendant, was a real estate lawyer licensed to practice inNew York. PINCHUS GLAUBER, the defendant, was a real estate appraiser licensed in New York.

From at least in or about 2004 through in or about 2014, IRVING RUBIN, a/k/a Joseph Rubin, YEHUDARUBIN, a/k/a Yidel Rubin, PINCHUS GLAUBER, MARTIN KOFMAN, JOEL KOPPEL, a/k/a YoelKoppel, a/k/a Joel Kopple, BENZION KRAUS, a/k/a Benzion Krauz, a/k/a Benzion Krause,ABRAHAM RUBIN, DESIREE RUBIN, a/k/a Henchy Rubin, JACOB RUBIN, a/k/a Yaakov Rubin,JOEL RUBIN, a/k/a Yoel Rubin, RACHEL RUBIN, a/k/a Ruchy Rubin, RIFKA RUBIN, a/k/a SuraRubin, RIVKY RUBIN, a/k/a Rivka Rubin, and SAMUEL RUBIN, a/k/a Shaye Rubin, the defendants,and others known and unknown (hereinafter, the Rubin Organization), fraudulently obtained mortgageloans and other loans from banks and other lending institutions (the lenders). The defendants obtainedthe loans by providing materially false information to the lenders about the borrowers assets andliabilities, including but not limited to false information about the borrowers employment, income, bankaccounts, and primary residence. Through their scheme, the defendants fraudulently obtained more than$20 million in loan proceeds in connection with more than twenty fraudulent loans. The majority of theloans went into default, and the majority of the loan proceeds were not repaid.

As part of the scheme to defraud, the defendants used the fraudulent loan proceeds to personally enrichthemselves and their families. Fraudulently obtained loan proceeds were used toward, among otherthings, (i) credit card debts for personal expenses of defendants, (ii) personal home mortgage paymentsof defendants, (iii) other real estate development projects including projects from which the defendantsand others earned rental income, and (iv) debts arising from other fraudulently obtained loans, to concealthe fraudulent nature of these loans.

As part of the scheme to defraud, the defendants and others known and unknown also engaged inextensive efforts to perpetuate and conceal the fraudulent scheme. These efforts included, but were notlimited to:

Numerous members of the conspiracy acting as the borrowers for different loans, falsely claiming

that the purpose of the loans was to purchase or refinance their primary residence, when, in factthe property was not their primary residence, and the loan proceeds were later distributed to othermembers of the conspiracy and to entities they controlled.The common claim by multiple co-conspirators actin