Mortgage, Real Estate, and Attorney Fraud, Oh My!

Twenty-three individuals were indicted in the Southern District of New York on allegations that they participated in an illegal scheme to defraud various banks and financial institutions by submitting fraudulent applications and supporting documentation for mortgages and home equity loans. As a result, the lenders were induced to make loans to persons and at terms that the lenders otherwise would not have funded. The defendants include brokers and processors who worked at the mortgage brokerages AGA Capital NY, Inc.(’AGA Capital‘) and Northside Capital NY, Inc. (’Northside Capital‘), in Brooklyn, New York, real estate appraisers and loan account executives.

-“Twenty Three Indicted in New York Straw Buyer Scheme”; Mortgage Fraud Blog;Jan. 5, 2007

Two ringleaders of a multimillion-dollar mortgage scam [Maurice McDowall, who directed the daily operations of the scheme, and Aleksander Lipkin, a mortgage broker who coordinated the fraudulent loans] are facing up to 30 years in prison and heavy fines and restitution after pleading guilty to bilking banks and fleecing foreclosure victims in Brooklyn

-“Two found guilty in mortgage scam and face 30 years in prison“; Daily News; June 5, 2008

I am under a fiduciary duty to my clients. I must put their interests ahead of mine. All attorneys do. The problem is, when millions of dollars were on the line in Sheepshead Bay and Coney Island, some attorneys didn’t do that. In one of the more elaborate schemes to play out in the world of real estate fraud in Brooklyn, members of AGA Capital, Inc., a mortgage brokerage on Coney Island Avenue, teamed up with attorneys, including Alexander Kaplan, Esq., real estate brokers, and appraisers in a scheme which earned millions of dollars in fees from using “straw” purchasers and filing false documents, including appraisals, earning commissions, fees, and more in the process. Many of the defendants have been sentenced to long terms in federal prison and the attorney involved lost his license and is also going to jail for some time. Worst of all, homeowners were literally robbed of their houses.

Believe it or not, this kind of thing happens every day, though usually on a much smaller scale. So what in the world are you to do if you are a purchaser in Sheepshead Bay and want to make sure your attorney is legitimate? Here are some tips to protect yourself:

The first thing you want to do is to make sure your attorney is actually licensed in the State of New York. While this may seem like a direct order by Captain Obvious, you would be surprised to learn of just how many people have been caught in New York practicing as attorneys when they have never passed that little thing known as the Bar Exam. How do you check? Simple, go online to the New York State Unified Court Systems website and check if your potential attorney is registered. If not, and when you call you constantly hear the supposed attorney’s mother in the background, that should give you cause for concern.

But let’s say the attorney is registered, how do you make sure the above scenario doesn’t happen to you? How do you make sure this person is trustworthy?References and referrals. I will say this again, references and referrals. Anyone in the world can rate themselves online and make it appear as if they’re a great attorney. However, when you see three separate testimonials praising the attorney on the same day, with user names like “Attorneyforu22” and “Lawguy8”, there may be an issue. I have the contact info for every single testimonial I put up, so I can always provide this to potential clients if I have to. Ask this real estate attorney if you can call some previous clients who they’ve done closings for. If he can’t do it, it’s an issue. If they think that’s too annoying and too much to ask, it’s an issue.

So let’s say you hired this attorney for your closing, but he is not responsive. Ask yourself:

• Did this guy just make me sign a contract without explaining it to me?
• Was I just made to feel stupid by asking a question?
• Did I just feel someone grabbing my wallet?

If the answers to any of these questions is yes, then you may want to reconsider going forward.

Furthermore, if you’re ever told by the seller of a property that their attorney wants to also represent you, or has someone to represent you, run. Literally. I am not kidding. It seems so obscenely obvious but I cannot tell you how many clients walked into my office in the heyday of the market with a contract in their hand and said, “The Sellers gave me this contract and told me to call his attorney and, furthermore, this has to be signed within 24 hours.” If this ever even comes close to happening to you, walk away from the deal immediately.

Lastly, if you’re at the closing, and the numbers change, or you’re being charged more by you’re attorney and they can’t explain why, then throw a fit. Really. Throw a fit. This is your money. If someone charged you $1,000 to do a closing, there should be no reason that you’re now being charged $2,000 the day you have to sign this contract (obviously there could be some agreement or fees that are legitimate that they can show, but barring that…). You are most vulnerable when you are in a room full of people with a mountain full of documents that you don’t understand and that everyone is telling you to sign. Take a step back, take a breath and figure out if something here doesn’t seem right to you. If the mortgage broker is suddenly showing you fees that didn’t show up on previous estimates, find out why. If their explanation is tantamount to, “Oh, this is just the Regular Ordinary Additional Just Because” fee, then step back. You may be getting taken. This happens much more frequently than you think.

I am an attorney, but the stereotypes of being evil aside, we’re generally good people. There are some bad apples in the bunch, though. If you’re getting a feeling that you’re being forced into something, or even rushed into something, and you have a bad feeling about it, then walk away. I can almost guarantee that there are many more companies like AGA Capital out there, because when there is money to be made a client’s interest can be illegally and unethically put on the back burner. Just make sure you don’t find yourself as the victim in that scenario. Using the above advice should set you on the right path.

Daniel Gershburg Esq., is a real estate and bankruptcy attorney with offices in Sheepshead Bay and Manhattan. The practice was specifically set up to change the way people view attorneys, by incorporating radical ideas like calling people back quickly, returning emails, giving clients ’round the clock access to their cases and charging low fees. For more information please visit

’s website.