The former head of the Urban League of Northeastern New York was sentenced last week to serve 5.25 years in federal prison, and ordered to pay more than $1.9 million dollars, for his leadership role in a massive mortgage fraud scheme that rocked Albany, New York. Thirty-nine-year-old Aaron Dare’s conviction stems from a guilty plea he entered on November 13, 2006 for wire fraud, mortgage fraud, and causing false statements to be made on HUD-Insured Loans.

From late 2000 through August of that same year, Aaron Dare defrauded AMI Capital, Inc. of Bethesda, Maryland, and the U.S. Department of Housing and Urban Development to obtain money and property by means of false and fraudulent pretenses. Dare purchases included the Hinckel Brewery Apartments, a multi-family residential housing project located at 201 Park Avenue, in Albany, NY; the Olde Franklin School Apartments, another multi-family residential housing project, located at 1675 Avenue B, in Schenectady, NY; and, the Historic Pastures Village Apartments, a multi-family residential housing project consisting of approximately 39 residential buildings located in the Historic Pastures area of Albany.

As part of the scheme, Aaron Dare provided false information to AMI and HUD, which insured the loans, regarding his experience and qualifications, and the identity, experience and qualifications of his purported investors. Promissory notes in the amounts of $1.8 million and $700,000 were prepared and executed between Dare’s company, Emerge Real Properties, LLC, and entities affiliated with the seller, which falsely made it appear to AMI and HUD that Dare and/or Emerge Real Properties had approximately $2.5 million in equity and credit to apply toward the purchase of the properties when, in fact, the promissory notes were false and fraudulent and Dare and his companies did not have such equity and credit to apply toward the purchase of the properties.

As another part of Aaron Dare’s scheme, an additional promissory note was prepared and executed, which was not provided to AMI or HUD, and which effectively cancelled out the purported equity reflected in the false and fraudulent $1.8 million promissory note.

Dare’s stated purchase price of the properties was inflated from approximately $6 million to $8.5 million to take into account the bogus promissory notes. Also, notwithstanding the existence of a significant financial relationship between Dare and the owner of the properties, Identity of Interest Disclosure Statements were prepared and executed that basically represented to AMI and HUD that there was no identity of interest between the entities that were identified as the borrower and the seller of the properties.

After reviewing extensive documentation provided by Dare and others, and in reliance on the false statements and documents admitted by Dare as part of his plea today, AMI made HUD- insured loans in the total amount of $7,577,400 to Dare’s company for the purchase of the three residential housing projects, with a total stated purchase price of approximately $8.5 million.

In execution of this scheme, on or about August 29, 2002, Dare knowingly caused to be transmitted in interstate commerce from AMI’s warehouse vendor in the State of Ohio to the State of New York, a wire transfer of funds in the amount of $3,678,866.42 for the purchase of the Historic Pastures Village Apartments. Shortly after the closing on the third loan in August 2002, all three loans went into delinquent status and, eventually, defaulted. Pursuant to the terms of the loan agreements, HUD foreclosed on the properties and, following the sale thereof, suffered a total loss of approximately $1,952,200.