Leader of Largest Mortgage, I.D. Scam in County History Sentenced

The kingpin of the largest mortgage fraud and identity theft ring in Nassau County history, which involved a home in West Hempstead, was sentenced to four to 12 years in prison Thursday.

James Robert Sweet, 44, of Westbury, played the lead role in an organization that stole more than $20 million from homeowners, banks, and the County government, according to Nassau County District Attorney Kathleen Rice.

Sweet, along with 16 others, were arrested in March and he pleaded guilty on Oct. 6 to Enterprise Corruption under New York’s Organized Crime Control Act, several counts of Grand Larceny, Money Laundering, and Falsifying Business Records, as well as Identity Theft, Scheme to Defraud and Conspiracy. He was also ordered to pay more than $1.2 million in restitution to lending institutions.

A two-year investigation by the D.A.'s office, dubbed "Operation: Sweet Deal," revealed that Sweet, and another Westbury man, Dwayne Benjamin, 44, were the leaders of this scam. They recruited others to convince straw buyers to purchase properties in the County, using their own personal information. In some cases, Sweet even told straw buyers that they would be assisting homeowners who were trying to sell their houses from foreclosure, as well as making a good investment, according Rice. What they didn't know was that they were actually helping the Sweet Deal members to line their pockets through mortgage fraud schemes, typically paying straw buyers $10,000 for the use of their name and personal information.

They would then negotiate with the sellers to purchase properties that were either already on sale or in distress at a higher price than what was being asked and then arrange to keep the difference in what the bank was lending and what the seller wanted as a profit.

"The scam worked because 'Sweet Deal' never intended to make any payments on the properties," Rice said at a press conference on March 16. "They only intended to walk away with the profit. Most of the homes ended up in foreclosure."

She pointed out that investigators found one case where the scammers purchased the same West Hempstead home twice in a just over a two-week period. On Nov. 28, 2005, a straw buyer allegedly took out a $390,000 mortgage to pay for the house on Tyler Street, but due to a delay in filing of paperwork in the County's Clerk's Office, the Sweat Deal members were able to quickly "purchase" the home again. They had a second straw buyer take out another $390,000 mortgage 18 days later. The official paperwork still listed the original homeowner's name.

This scheme allowed them to use cash from the first mortgage to pay off the original owner's outstanding mortgage and keep the second, which after closing costs amounted to $361,000. Then, they let the house slip into foreclosure.

Still not satisfied, the group recruited relatives, friends and colleagues to steal the identities of home buyers and property owners and impersonate them at the closings. 

"Using these stolen identities, Sweet Deal members could impersonate both the home buyer and seller and keep all the proceeds of the phony home sale," she said, explaining that they were able to accomplish this with at least six properties in Westbury.

Sweet Deal members would also play the part of paralegals and even stole an attorney's identity to set up a bank account to launder money through, according to Rice.

"At these closings everything was fake, except the money being stolen," she said. "Once they had stolen the mortgage proceeds, they had no reason to keep making mortgage payments and they let the property fall into foreclosure."

As for the actual property owners, "they were unaware it was being sold from under them," said Abigail Margulies, head of the Crimes Against Real Estate division in the County's DA Office.

A second scheme involved defrauding the County government by renting properties they had purchased through straw buyers before and during foreclosure proceedings. Some of these properties qualified for low-income subsidies through the county, but the checks could only be issued to the owners who were on record, in this case, the straw buyers. To get around this, Sweet Deal members allegedly submitted fake deeds to the program indicating they owned the properties and were able to steal more than $80,000 in subsidies.

Benjamin also pleaded guilty to multiple felony charges on Oct. 5 and will be sentenced Dec. 15.