NEWARK – A Scotch Plains man was sentenced to 33 months in prison for his role in a mortgage fraud scheme he organized through Elite Financial Solutions, a purported home foreclosure rescue company he owned and operated, U.S. Attorney Paul J. Fishman announced.
Stephen French, 53, previously pleaded guilty before U.S. District Judge William J. Martini to one count of wire fraud conspiracy, admitting he caused more than $1 million in losses through the scheme. Martini imposed the sentence on March 1 in Newark federal court.
According to documents filed in this and related cases and statements made in court: Beginning in February 2005, French devised a scheme to use Elite to fraudulently induce financial institutions to provide mortgage loans to unqualified borrowers, enabling French and his co-conspirators to earn consulting fees from the sales of properties financed by the loans.
Michael Martino, 47, of Bloomfield, who as an employee of Elite was responsible for recruiting straw buyers for properties in foreclosure, was sentenced on March 15, 2011, by Martini to a year and a day in prison. Martino previously pleaded guilty to one count of wire fraud conspiracy before Martini.
French, Martino, and others at Elite targeted New Jersey homeowners who could not make mortgage payments and were facing foreclosure. They would promise the homeowners that Elite would help them keep their homes and repair their damaged credit. The homeowners would be instructed to permit title to their homes to be put in the names of straw buyers for one or two years. French promised to improve their credit ratings during that time, help them obtain more favorable mortgages, and ultimately return title to their homes.
French, Martino, and others at Elite told the homeowners that equity withdrawn from their homes would be kept in escrow and used to pay the mortgages and expenses and to repair their credit. Instead, Elite took a “consulting fee” of $25,000 per property, and the remaining equity was deposited into bank accounts French controlled. French, Martino, and others at Elite paid the straw buyers $10,000 for use of their names and credit histories in the transactions, and submitted fraudulent loan applications to mortgage lenders in the straw buyers’ names in order to ensure the loans would be approved.
In addition to the prison term, Martini sentenced French to five years of supervised release and ordered to pay restitution of $1,957,525.
Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Michael B. Ward in Newark, with the investigation leading to the sentence.
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