NJ Man Sentenced for Massive $60 Million Fraud Scheme
Authorities say a man from Bergen County has been sentenced to 97 months, or about eight years, in prison for orchestrating a long-running bank and securities fraud scheme.
U.S. Attorney Philip R. Sellinger says 53-year-old Seth Levine of Teaneck previously pleaded guilty to one count of conspiracy to commit bank fraud and one count of securities fraud. He was sentenced on Thursday.
Levine was the founding partner, owner, and managing member of Norse Holdings, which was the parent company to more than 70 subsidiary companies. Each of the subsidiary companies owned one or more multifamily buildings, located primarily in New Jersey. From 2009 through August 2019, Levine directed a scheme to fraudulently refinance the multifamily properties by providing materially false information to financial institutions about the rents collected, the number of apartments leased, the expenses, and the true owners of the properties.
Sellinger's office says many of the lenders who approved those mortgages based on false information from 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).
Because the refinances were obtained with fraudulent data regarding the properties’ income and expenses, the multifamily properties were overvalued and rents and other income from the properties did not cover the mortgage payments and other expenses associated with the properties. To cover the shortfalls, Levine obtained additional cash-out refinances, thereby increasing his total debt incurred.
When the fraud was uncovered, "the outstanding balance of the fraudulently obtained mortgages on the multifamily properties was more than $150 million, including 40 mortgages held by Freddie Mac with an outstanding loan balance of approximately $103 million. At the time of sentencing, the bank fraud conspiracy resulted in losses to victim lenders of at least $47 million."
While defrauding the lending financial institutions, Levine also carried out a securities fraud scheme to defraud investors in the multifamily properties. He solicited investors to invest in the multifamily properties based on materially false statements and promises about the condition of the properties and the use of investor funds.
At the time of sentencing, the securities fraud victims lost more than $13 million.
Individuals who believe they may have information about this case are asked to contact the FBI at (800) CALL-FBI.