BOSTON—Following a seven-week trial, a federal jury found five defendants guilty of mortgage fraud stemming from a scheme that involved 21 properties in the Greater Boston area, 10 mortgage lenders, and more than $10.6 million in loan proceeds.

United States Attorney Carmen M. Ortiz; Warren T. Bamford, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; Robert Bethel, Postal Inspector in Charge of the United States Postal Inspection Service, Boston Division; Susan Dukes, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation, Boston Field Division; Boston Mayor Thomas M. Menino; and Boston Police Commissioner Edward Davis, announced that ERIC L. LEVINE, 57, of Brookline; J. DANIEL LINDLEY, 62, of Jamaica Plain; ERNST APPOLON, 31, of Braintree; DANIEL APPOLON, 23, of Dorchester; and LATOYA HALTIWANGER, 28, of Los Angeles, were convicted of wire fraud and conspiring to commit wire fraud. LEVINE and LINDLEY were also convicted of money laundering.

“This type of greed and self-interest has directly contributed to the deterioration to many neighborhoods across the country,” said U.S. Attorney Ortiz. “The U.S. Attorney’s Office and our law enforcement partners, are committed to ensuring that those in the real estate profession who exploit consumers for their own profit are exposed and brought to justice.”

Evidence at trial established that between May 2005 and June 2006, the defendants and others participated in a conspiracy to obtain $10.6 million in mortgage loan proceeds by fraud. Specifically, the scheme involved the use of inflated purchase prices and documents containing false statements about purchase price, borrower income, employment, or intent to reside in the property. The difference between purchase prices negotiated with sellers and inflated purchase prices submitted to lenders ranged from as little as $15,000 to as much as $255,000 on individual properties in South Boston, Dorchester, Jamaica Plain, Quincy, Hyde Park, and Cohasset, aggregating to more than $1.9 million. From this $1.9 million, the defendants and other co-conspirators pocketed more than $1.7 million in illegal proceeds. The mortgages on all of the properties were defaulted upon and nearly all went into foreclosure.

LEVINE, a suspended attorney, and LINDLEY, a practicing attorney, participated in the loan closing process and handled the money. ERNST APPOLON, a real estate broker, identified properties for the conspirators, negotiated purchase prices with sellers, and recruited people to lend their names and credit information (“straw” borrowers) to obtain mortgage loans for property purchases. HALTIWANGER, a mortgage broker, was the loan originator for three of the properties in the conspiracy and was the “straw” borrower for a separate property purchase. DANIEL APPOLON recruited two “straw” borrowers whose name and credit information were used to purchase three properties.

The defendants face up to 20 years’ imprisonment to be followed by three years of supervised release and a $1 million fine on each count of wire fraud. For the conspiracy, they face up to five years’ imprisonment to be followed by three years of supervised release and a $250,000 fine. On the money laundering counts, LEVINE and LINDLEY face up to 10 years’ imprisonment to be followed by three years of supervised release and a $250,000 fine.

Co-defendants ANDRE JUNIOR LAMERIQUE, WIDNER LAMARRE, JERMAINE BLAKE, SAMUEL JEAN-LOUIS and JEAN NORISCAT pled guilty to conspiracy to commit wire fraud and several counts of wire fraud. They each face a maximum of 20 years’ imprisonment to be followed by three years of supervised release and a $1 million fine on each count of wire fraud. For the conspiracy, they face up to five years’ imprisonment to be followed by three years of supervised release. NORISCAT also pled guilty to several counts of aggravated identity theft and faces a mandatory two years’ imprisonment for each of the identity theft counts in addition to any other sentence imposed.

The defendants have been scheduled for sentencing as follows: LAMARRE and BLAKE, September 14, 2010; JEAN-LOUIS, September 16, 2010; LAMERIQUE and NORISCAT, September 21, 2010; LEVINE and ERNST APPOLON, September 22, 2010; LINDLEY, September 23, 2010; and DANIEL APPOLON and HALTIWANGER, September 29, 2010.

Co-defendant RALPH APPOLON is scheduled for trial in February 2011.

The case was investigated by the Federal Bureau of Investigation, United States Postal Inspection Service, and Internal Revenue Service, with assistance from the Boston Police Department. It is being prosecuted by Assistant U.S. Attorneys Victor A. Wild and Ryan M. DiSantis of Ortiz’s Economic Crimes Unit and Mary Murrane of Ortiz’s Asset Forfeiture Unit.

Mortgage fraud is a key focus of the Department of Justice who in November 2009 created the Financial Fraud Enforcement Task Force. The task force works to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

Acting United States Attorney Robert S. Cessar announced today, May 28, 2010, that during the week beginning May 24, 2010, one attorney pleaded guilty in connection with a mortgage fraud scheme and another attorney was sentenced to two years of imprisonment in connection with a different mortgage fraud scheme.

On May 27, 2010, Daniel Sporrer, a resident of Pittsburgh, Pennsylvania, pleaded guilty in federal court in Pittsburgh to a charge of wire fraud conspiracy in connection with a mortgage fraud scheme.

Sporrer, age 46, pleaded guilty to one count before United States District Judge Nora Barry Fischer.

In connection with the guilty plea, Assistant United States Attorney Brendan T. Conway advised the court that Sporrer participated in a mortgage fraud scheme with Robert Arakelian, who was a mortgage broker associated with Pittsburgh Home Loans, Karen Atkison, who was a closing agent who worked with Sporrer, and others. As part of the conspiracy, Arakelian submitted false loan applications to lenders that falsely reported that the borrowers had sufficient funds in their own accounts to make the down payments associated with the purchases of real estate and to otherwise qualify for the loans to finance the purchases of the real estate. The closing documents, which were prepared and executed by Sporrer and Atkison, falsely reported to the lenders that the borrowers made down payments from their own funds at the closings, when, in fact, they did not make any payments at the closings. In addition, Sporrer advanced money to Arakelian in advance of the closings so that Arakelian could purchase certified checks, copies of which were made to present to the lenders to falsely verify that the borrowers had made the down payments.

Judge Fischer scheduled sentencing for October 29, 2010. The law provides for a total sentence of 20 years in prison, a fine of $250,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed is based upon the seriousness of the offense and the criminal history, if any, of the defendant.

On May 25, 2010, Robert Danenberg, a resident of Pittsburgh, Pennsylvania, was sentenced to two years of incarceration and three years of supervised release on his conviction of wire fraud conspiracy in connection with a different mortgage fraud scheme.

United States District Judge Ambrose imposed the sentence on Danenberg, age 55.

According to information presented to the court by Assistant United States Attorney Brendan T. Conway, Danenberg is an attorney who specialized in closing real estate transactions. He participated in a mortgage fraud conspiracy in which a co-conspirator recruited buyers to purchase properties at fraudulently elevated prices and financed through fraudulently obtained loans. Danenberg’s role in the conspiracy was to close the fraudulent loans, and the closings themselves were fraudulent in two ways. First, the closings required the borrowers to bring certified funds to the closings from their own funds to make the down payments associated with the purchase. The borrowers, however, did not have sufficient funds to make the down payments and were often getting cash back at the closings. The down payments were paid by the sellers, the mortgage broker, and on several occasions, by Danenberg himself. The closings were also fraudulent in that the settlement statements reflected payments to contractors for work purportedly already done on the properties serving as collateral for the loans. In fact, however, as Danenberg well knew, those payments were kickbacks to participants in the conspiracy.

In total, Danenberg closed approximately 70 fraudulent loans totaling in excess of $5,000,000 of loan proceeds. Danenberg pleaded guilty after four days of trial.

The Mortgage Fraud Task Force conducted the investigation that led to the prosecution of Sporrer and Danenberg. The Mortgage Fraud Task Force is comprised of investigators from federal, state and local law enforcement agencies and others involved in the mortgage industry. Federal law enforcement agencies participating in the Mortgage Task Force include the United States Secret Service; Federal Bureau of Investigation; the Internal Revenue Service, Criminal Investigations; the United States Department of Housing and Urban Development, Office of Inspector General; and the United States Postal Inspection Service. Other Mortgage Fraud Task Force members include the Allegheny County Sheriff’s Office; the Pennsylvania Attorney General’s Office, Bureau of Consumer Protection; the Pennsylvania Department of Banking; the Pennsylvania Department of State, Bureau of Enforcement and Investigation; and the United States Trustee’s Office.

Mortgage industry members with knowledge of fraudulent activity are encouraged to call the Mortgage Fraud Task Force at (412) 894‑7550. Consumers are encouraged to report suspected mortgage fraud by calling the Pennsylvania Attorney General’s Consumer Protection Hotline at (800) 441‑2555.