An Old Bridge man admitted Wednesday to his part in a phony foreclosure rescue scheme that was part of a $4.4 million mortgage fraud, U.S. Attorney Paul J.Fishman announced in a press release.
Frederick “Freddie” Grippo, 32, of Old Bridge, formerly a loan officer at Worldwide Financial Resources and an officer of Vanick Holdings, pleaded guilty before in Newark federal court to one count of conspiracy to commit wire fraud.
According to documents filed in this case and statements made in court, between January 2008 and February 2010, a co-conspirator of Grippo, his father Vito Grippo, was the president of Morgan Financial Equity Shares and Vanick Holdings, located at 22 South Holmdel Road in Holmdel.
Morgan Financial was held out to the public as a company that could help homeowners in financial distress who faced foreclosure on their homes through something called the “Equity Share Program.”
As described by Morgan Financial of Holmdel and its president, the Equity Share Program involved creating a limited liability company in the name of the homeowner’s house in which the homeowner would supposedly own a 90 percent interest, with the rest to be owned by one or two private investors.
In reality, the so-called investors invested nothing and were instead straw buyers recruited by Grippo or his co-conspirator because they had good credit, the release said.
Grippo and his associates then made out mortgage loan applications in the names of the phony investors for the purchase of the distressed properties.
A homeowner in distress would come to a closing at the Morgan Financial office in Holmdel at which he or she would be given a stack of documents to sign that the homeowner thought would prevent foreclosure, but which actually transferred title to the investor, the office said.
The new mortgage loan applications filled out in the name of the investor by Grippo or his associates contained materially false information about the loan applicant’s monthly income, his assets and whether the residence to be “bought” would be his primary residence.
Once the new loan application was filled out, it would be submitted to Worldwide Financial Resources for processing, and Grippo, a loan officer at Worldwide, would see to it that the loan was approved.
Once the loan was approved and the loan money was wired to the settlement agent for a given transaction, Grippo’s co-conspirator would direct the settlement agent to forward a portion of those loan proceeds to bank accounts that the co-conspirator controlled.
The scheme succeeded in obtaining $4.4 million in mortgage loans.
Properties whose original owners fell victim to the Equity Share Program are located throughout the metropolitan area, including in Rutherford, N.J., Monroe, N.J. and Brooklyn, N.Y.
The conspiracy charge to which Grippo pleaded guilty carries a maximum potential penalty of 30 years in prison and a maximum fine of $1,000,000.
Sentencing is scheduled for March 6, 2013.
U.S. Attorney Fishman credited special agents from the FBI’s Red Bank Resident Agency, under the direction of Special Agent in Charge Michael B. Ward in Newark; and special agents from IRS—Criminal Investigation, under the direction of Acting Special Agent in Charge Shantelle P. Kitchen, for the investigation leading to today’s guilty plea.
The government is represented by Assistant U.S. Attorney Bohdan Vitvitsky of the U.S. Attorney’s Office Economic Crimes Unit in Newark.
Grippo is represented by Stacy A. Biancamano Esq., of West Orange, N.J.