Bergen County man admits decades of $ 80 million fraud program | USAO-NJ
NEWARK, NJ – A man from Bergen County, New Jersey, today admitted to orchestrating longstanding banking and securities fraud that resulted in huge losses for financial institutions and investors, US Attorney Rachael A. Honig said.
Seth Levine, 52, of Teaneck, New Jersey, pleaded guilty via video conference before US District Judge Madeline Cox Arleo over information accusing him of conspiracy to bank fraud and once of securities fraud.
According to documents filed in this case and statements made in court:
Levine was a founding partner, owner and executive member of Norse Holdings, the parent company of more than 70 subsidiaries. Each of the subsidiaries owned one or more apartment buildings, most of which are located in New Jersey. From 2009 to August 2019, Levine led a program to fraudulently refinance the apartment buildings by providing financial institutions with substantially false information about the rents collected, the number of apartments rented, the expenses and the real owners of the properties. Levine and others provided forged documents to lenders, including forged rental agreements that created the appearance of empty rooms being occupied and inflating rent paid by tenants; fake personal financial reports; forged expense documents; and fake company agreements that misrepresented ownership interests in the apartment buildings. Levine also forged signatures on some of the fraudulent documents presented to lenders. As a result of the fraudulent refinancing, Levine received cash disbursements from the lenders, which Levine and others used to enrich themselves and to continue the fraudulent scheme.
Many of the lenders who approved mortgages based on false information provided by Levine and others, in turn, sold those mortgages to the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal National Mortgage Association (Fannie Mae). Since the refinancing was carried out with fraudulent information on the income and expenses of the properties, the apartment buildings were overvalued and the rents and other income from the properties did not cover the mortgage payments and other expenses associated with the properties. To cover the deficits, Levine received additional cash-out refinancing, which increased his overall debt. In total, Levine controlled at least 70 apartment buildings with around 2,500 apartments. The outstanding balance of fraudulently obtained mortgages for the apartment buildings was more than $ 150 million, including 40 mortgages from Freddie Mac with an outstanding balance of approximately $ 103 million. The bank fraud conspiracy resulted in losses of at least $ 65 million to the sacrificed lenders.
While Levine defrauded the lending financial institutions, Levine also ran a securities fraud program to defraud investors in the apartment buildings. He urged investors to invest in the apartment buildings based on material false information and promises about the condition of the property and the use of investor money. Levine advocated to investors that his behavior would be restricted by a company agreement. After Levine had acquired the apartment buildings, however, he violated the assurances made to the investors, among other things by selling parts of Levine’s ownership interest in the real estate without the consent of the investors, attracting additional investors without consent and refinancing the apartment buildings without the consent of the investors. Levine provided the investors with fraudulent documents, such as company agreements exaggerating Levine’s personal investment in the apartment buildings, and documents with forged signatures by Levine. He also mixed up investor funds and used the funds in breach of representations to investors by using investor funds to aid other apartment buildings, make payments to other investors, and encourage fraud. Securities fraud victims lost more than $ 15 million.
The bank fraud conspiracy carries a maximum possible sentence of 30 years in prison and a fine of $ 1 million. Securities fraud counting is punishable by a maximum of 20 years in prison and a fine of $ 5 million. The verdict is scheduled for July 26, 2021.
Individuals who believe they have information on this case can contact the FBI at 1-800-CALL-FBI (225-5324).
Acting US Attorney Honey has special agents from the FBI under the direction of special agent George M. Crouch Jr. in Newark and special agents from the Federal Housing Finance Agency, Office of Inspector General, under the direction of the special agent in. Credited Accuse Robert Manchak with the investigation leading to today’s admission of guilt. The US Securities and Exchange Commission today filed a civil lawsuit against Levine based on allegations of securities fraud.
The government is represented by Assistant Attorney General Heather Suchorsky of the
White Collar Crime and Special Assistant to US Attorney Charlie L. Divine of the Federal Housing Finance Agency, Office of Inspector General.