WHITE PLAINS, N.Y. -- Five people, including one from White Plains and one from Yonkers, have been indicted in a $33 million mortgage fraud conspiracy in Westchester and Putnam counties, according to Preet Bharara, the U.S. Attorney for the Southern District of New York.
The five defendants -- Bruce Lewis, 54 and Jacqueline Graham, 47, who are both still at large, Anthony Vigna, 59, of Thornwood, Rocco Cermele, 54, of Yonkers, and Paula Guadagno, 58, of White Plains -- are accused of committing bank fraud, wire fraud, and mail fraud in connection with a debt-elimination scheme to defraud homeowners and banks, Bharara said.
“The defendants allegedly preyed on vulnerable homeowners struggling with their mortgage payments and, with their greed, victimized them further. When the defendants were done with the victims, after falsely promising to reduce or even eliminate their mortgage debt for fees, these homeowners were left much worse off, in even greater debt," he said. "With the charges today, and thanks to the investigative work of the FBI and HUD, the defendants now face federal fraud charges.”
According to the indictment, in 2011 and 2012, Lewis and Graham, along with an unindicted co-conspirator were partners in a business called the Pillow Foundation or the Terra Foundation. Terra marketed itself as a business that would investigate and eliminate mortgage debt in exchange for a fee. The business made it a point to solicit clients who were having difficulties making their mortgage payments.
Others involved in the scam included; Vigna, who worked as an in-house lawyer at Terra and provided legal services to the business and its clients; Cermele, Terra’s director of operations who recruited clients, and Guadagno, a real estate title professional who performed real estate title work for Terra.
Their scheme was to tell potential clients that Terra could eliminate their mortgage debt in exchange for a fee. In reality, Terra filed fraudulent discharges of mortgages at local county clerk’s offices in Westchester and Putnam counties and in Connecticut. The fraudulent documents made it appear as if Terra’s clients’ mortgages had been discharged, when in fact they had not.
To profit from their scheme, they charged monthly fees they said covered, among other things, audits of the clients’ properties they often failed to perform. The group also encouraged their clients to take out second or reverse mortgages on the properties in which Terra had claimed to have discharged the first mortgages.
Once the clients had taken out the second or reverse mortgages, Terra and the defendants retained substantial portions of the proceeds. Some of the second or reverse mortgages were made under HUD’s Home Equity Conversion Mortgage Program.
In total, Terra and the defendants filed nearly 60 fraudulent discharges, making a profit of more than $33 million, Bharara said.
“As charged, the defendants exploited a program designed to help cost-burdened individuals enjoy the privilege of affordable housing. Crimes of this nature not only hurt their victims financially, but often force upon them other forms of anguish while harming the financial integrity of the very programs established to help them," said FBI Assistant Director-in-Charge William F. Sweeney
Each was charged with one count of conspiracy to commit wire fraud, bank fraud, and mail fraud, which carries a maximum penalty of 30 years in prison and a $1 million fine.
Bharara praised the outstanding investigative work of the FBI and HUD-OIG. He also thanked the Westchester and Putnam County District Attorney Offices and the Cheshire Police Department in Cheshire, Connecticut, for their ongoing assistance in the case.
This case is being handled by the Office’s White Plains Division. Assistant United States Attorneys Jennifer Beidel, Michael Maimin, and James McMahon are in charge of the prosecutions.
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