Ocean County Loan Officer Gets 18 Months In $6M Mortgage Scam

NEWARK, NJ — A Jackson Township man has been sentenced to 18 months in prison for his role in a large-scale mortgage fraud scheme that used phony documents and straw buyers to acquire more than $6 million in loans, U.S. Attorney Craig Carpenito announced Tuesday.

Joseph DiValli, 49, pleaded guilty in May 2015 before U.S. District Judge Susan D. Wigenton to an indictment charging him with one count of conspiracy to commit wire fraud, one count of wire fraud and one count of tax evasion. Wigenton imposed the sentence Tuesday in Newark federal court. In addition to the jail time, he was sentenced to three years of supervised release and ordered to pay restitution of $2,322,045.

Carpenito's office said according to the court documents and testimony, the scheme occurred from March 2011 through November 2012. DiValli and other conspirators agreed to fraudulently obtain mortgage loans for properties located in North Jersey.

After recruiting “straw buyers” to purchase the properties, DiValli and others submitted false and fraudulent loan applications and supporting documents so the straw buyers could qualify for the loans. DiValli and others also used another conspirator, who worked at a bank, to create misleading certifications showing certain bank accounts held more money than they actually had. DiValli and other conspirators also submitted false appraisal reports, backdated deeds and used unlicensed title agents to close transactions and disburse the mortgage proceeds.

DiValli, who was a loan officer for a North Jersey mortgage lender, facilitated some of these fraudulent transactions, including a $244,855.26 mortgage on a property located on Smith Street in Elizabeth. Overall, the scheme induced lenders to issue more than $6 million in loans, resulting in several defaults and exposing lenders and the Federal Housing Administration to more than $2 million in potential losses. He was arrested in January 2013 in the scam along with eight other people.

DiValli also admitted using a separate scheme to modify the mortgage on his personal residence. Between March 2011 and June 2012, Divalli used false payroll ledgers and earnings statements to deceive a loan officer into believing that his net earnings were lower than his actual income level.

DiValli also admitted receiving income of more than $450,000 in 2012. In order to avoid taxes of $79,000, he failed to file taxes for 2012 and cashed his paychecks at a check-cashing facility to conceal his income.

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